Address by AFSA Chief Executive Tim Beresford at the 2026 Australian Finance Industry Association Summit, Tuesday 23 June.
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Acknowledgement of Country
I’d like to acknowledge the traditional owners of the land we meet on today, the Wurundjeri Woi Wurrung people of the Eastern Kulin Nation, and pay my respects to Elders past and present.
Thank you for the opportunity to speak to you this afternoon.
As financiers and AFIA members, you play a key role in the systems we regulate at AFSA, as well as the wider credit system.
I want to cover 4 things today:
- The changing global risk environment.
- Trends we’re seeing in the Australian credit system.
- The challenge for regulators and creditors
- And how we can respond.
Changing global risk environment
Pull up any global risk report and the themes are broadly the same: global risks are increasing and stability is becoming more elusive.
APRA focused on 2 key risks in last month’s System Risk Outlook.
One is the potential impacts on Australia’s financial system flowing from the war in the Middle East and other geopolitical volatility.
And it says rapid developments in AI are outpacing the ability of many entities to manage the risks.
Today’s myriad risks are changing the way we interact: across international trade lines, diplomatic channels, business relationships and back fences.
Trust – the glue of a civil society – is one casualty.
The Edelman Trust Barometer has charted declining public trust in government, media and institutions for decades.
This year’s report shows the long-term erosion of trust has made people more insular. Trust is increasingly local and personal.
This has implications for regulators and creditors in how we engage with the communities we serve.
There are lessons for us all – to act consistently and transparently, communicate clearly and lead with fairness. To be predictable, competent and follow through on the things we say we’ll do.
It’s more important than ever for us, as key participants in Australia’s credit system, to demonstrate collaboration and trust.
In that vein, I want to commend the work Diane and the team have done developing AFIA’s Finance Industry Code of Practice, which comes into effect in October.
The first of its kind for Australia’s non-bank lending and specialist banking sector, the code sets clear standards of conduct and disclosure that customers can expect of your members.
Some really good work has gone into developing this code.
That work is necessary given the behaviour we’re witnessing by some small financial services operators who choose to remain outside the AFIA network.
That behaviour can have a contagion reputational effect on the wider industry and the honest operators within it.
Trends we're seeing in the credit system
I want to highlight 3 trends we’re seeing in the credit system that may affect your businesses.
Declining financial resilience
The first is the declining financial resilience of Australian households.
Our demographics show one in five debtors has an asset-to-liability ratio below 10%. Their debts outweigh their assets by more than 10 to one.
That leaves very little buffer when an economic shock arrives, like the recent financial pressures caused by the Middle East conflict, or a lost job or health issue.
Personal insolvencies have been rising modestly in recent years, from their lows of around 10,000 in 2021-22 during the government’s COVID-19 economic response.
We expect 13,500 personal insolvencies this financial year, and 15,250 in 2026-27.
We’re still well below the post-Global Financial Crisis peak of 37,000 insolvencies in 2009.
But global uncertainty is showing up in household budgets, through housing affordability, cost of living, mortgage stress and declining financial resilience.
You may encounter more customers experiencing financial vulnerability. The hardship provisions you extend to them will be a factor in how they navigate these difficulties.
Change in where people turn for credit
We are also seeing a change in where people turn for credit, with the substantial contraction of the unsecured credit market.
In 2008, personal credit – of which approximately 80% is unsecured – was 14% of GDP. Now it’s around 6%.
Now, instead of taking out a personal loan to buy a car, people turn to secured credit – their redraw facility or offset account.
This has allowed product innovation in the unsecured credit market, and new players to enter the market.
Buy now pay later is now much more prominent in the system.
A decade ago, around 2% of debtors entering personal insolvency had a BNPL debt. Today, it’s almost half. Among debtors under 29, it’s 65%.
BNPL only makes up around 1% of total debts in the personal insolvency system, because transaction values are low. But its presence is growing.
Other products gaining traction include payday loans and cryptocurrency.
Taken together, these trends point to a higher-risk environment: higher-risk products, and higher-risk operators with mixed social licences, targeting financially vulnerable consumers.
Change in who’s initiating bankruptcy
And a third trend we’re seeing is a change in who’s initiating bankruptcy.
For these insights, I draw from the Financial Counselling Australia report, Who’s Making Australians Bankrupt? published in November.
It found strata managers, non-bank business lenders and motor vehicle finance companies are becoming more prominent in initiating bankruptcy.
Strata management companies and non-bank lenders now make up almost a quarter of all forced bankruptcies, while the Big Four banks account for less than 1%.
Private schools are also emerging users of bankruptcy, accounting for 2% of cases in 2024-25.
This is not how personal insolvency was intended to work.
The system is designed to give people in serious financial difficulty the opportunity for a fresh start, while allowing creditors to access at least some of what is owed to them.
But some creditors are exploiting the bankruptcy process to place individuals into insolvency over relatively modest debts.
They are using the threat of bankruptcy to coerce people into paying overdue accounts.
This undermines public confidence in the insolvency system.
While I have limited recourse in this area, I am writing to some of these organisations to remind them that their practices are inappropriate.
And if you know of any organisation behaving in this way, please bring it to our attention.
The challenge for regulators and creditors
Collective stewardship
The trends I’ve outlined affect the way people interact with the credit system.
They potentially bring people into contact with less reputable credit providers, which undermines trust in the wider system. Trust which is already at a premium.
In this environment, cooperation matters more than ever.
The system works best when we all work together. When there is collective stewardship.
In speaking engagements like these, no matter the audience, I have one clear message.
You are part of that collective stewardship. You may see things we don’t. So, we want to hear from you:
- Where you think the system can be improved.
- Where you’re seeing emerging risks in the credit system.
- Where you see system misuse.
I need your eyes and ears. If you see something, say something.
AFIA’s new code of practice is a good reference point. It draws a line under what is acceptable practice.
When you see an organisation or individual cross that line, you can call it out. To AFIA. Or to us at AFSA.
Regulatory Action Statement
The way we manage system risk at AFSA is outlined in our Regulatory Action Statement, or RAS.
We recognise we can’t mitigate every risk.
Instead, we target harms posing the greatest risk to the integrity of the systems we regulate.
Our RAS focuses on 4 key system harms outlined on this slide. I’ll focus on 2 areas where we’re keen to engage your support as credit providers.
- Manipulating personal insolvency proposals and creditor meetings to protect wealth.
- Not removing registrations on the PPSR.
Manipulating personal insolvency agreements
I’m sure you all followed the matter involving failed publican Jon Adgemis.
His business collapsed last year with debts of $1.8 billion, the largest bankruptcy since Alan Bond’s.
He sought to avoid bankruptcy through a personal insolvency agreement, or PIA.
PIAs represent just 1.7% of personal insolvencies – and it’s where we see some of the greatest system misuse.
Mr Adgemis’ PIA offered creditors just 0.15 cents in the dollar. Zero point one five. Much lower than you’d expect from a PIA; or even a bankruptcy
We raised concerns about the fairness of the PIA and the Federal Court has since placed Mr Adgemis into bankruptcy.
This is not an isolated case.
In fact, we escalated 15% of all draft PIA proposals this financial year for further review.
Of those, 32% required me to use my statutory powers as the Inspector-General in Bankruptcy and 22% are being considered for disciplinary action.
In 58% of cases, registered trustees were required to issue a supplementary report, so creditors could make an informed decision about the proposal they were voting on.
This is where you as credit providers come in.
The legislative framework places creditors at the centre of deciding whether a PIA proceeds.
Creditors hold strong powers under the Bankruptcy Act, and I encourage you to use these powers and participate fully in the process.
Review PIA proposals carefully, participate in voting processes, and seek information to make informed decisions.
Your participation helps to strengthen the process and protects system integrity.
Not removing registrations on the PPSR
The second area where I believe credit providers can support the systems we regulate is in relation to the removal of outdated registrations from the PPSR.
As you know, the PPSR is a 24/7 national online database for searching and registering security interests in personal property, such as cars, boats, tools, machinery or company assets.
It’s a critical part of Australia’s credit infrastructure.
We particularly want to stress to small businesses the value of the PPSR as a risk management tool.
So, remind your small business clients to do a $2 PPSR search when they buy second-hand equipment – not just a vehicle – to make sure they’re getting clear title.
And if they’re a business that creates security interests by selling on consignment or leasing out equipment, for example, they should register their interest on the PPSR.
To maintain the quality and integrity of the PPSR, it must accurately reflect outstanding security interests at any one time.
Yet, secured parties are slow to remove registrations, even though they’re obliged under legislation to do so ‘in a timely manner’.
Inactive or outdated registrations prevent consumers from accessing credit and delay business transactions.
We’ve been engaging with credit providers to clean up the register.
We’ve contacted more than 120 secured parties with large volumes of registrations that have no specified end date.
And we’ve had strong cooperation, resulting in the removal of 215,000 outdated registrations.
One major motor vehicle financier proactively identified and discharged 39,000 outdated registrations, while a major financial institution removed 26,000.
These removals make a tangible contribution to better system accuracy and credit flow.
If you’re one of those credit providers who’ve responded to us, thank you.
And if we’ve yet to hear from you, please look at how you can help us improve the accuracy of this critical risk management tool.
Conclusion
Today’s risk environment is complex and shifting constantly.
The risks are interconnected. They show up in our respective ecosystems in different ways.
That’s why trust and cooperation matter so much in this moment.
Risk can’t be managed from a single desk, office or agency. It’s a collective responsibility.
It starts with sharing information. Talking about what’s going on in our respective necks of the woods.
Through those conversations, we gain clearer insights into how risk is shaping the financial landscape and develop more robust, coordinated responses.
Which contributes to a stronger credit system, benefitting everyone.
