Quarterly Statement by the Council of Financial Regulators – September 2026
The Council of Financial Regulators (the Council) held its regular quarterly meeting on Wednesday, 2 September 2026. The Council is the main coordinating body for Australia’s financial regulators, with the ultimate aim of promoting the stability of the financial system and supporting effective and efficient regulation. It brings together the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the Reserve Bank of Australia (RBA).
The Australian financial system has remained resilient amid heightened geopolitical and operational risks
The Council assessed that while the global financial system had weathered several shocks in recent years, global financial stability risks remained elevated. Geopolitical tensions, including ongoing conflicts in the Middle East and eastern Europe, remained high, while rapid technological change was adding to the operational threat environment for key financial institutions and infrastructure. Some sovereign bond markets were also repricing in response to debt sustainability concerns; a disorderly repricing of risk premiums in global financial markets remained a threat to global financial stability.
Against this backdrop, Council members observed that the Australian financial system had continued to maintain a good degree of financial resilience. Most household and business balance sheets were in a strong financial position. The banking system had maintained strong capital and liquidity positions alongside prudent lending standards. Nevertheless, members noted that it was important that lending standards remained sound through a more uncertain period, and that financial institutions continued to strengthen cyber and operational resilience. Council members also discussed progress on joint initiatives aimed at addressing vulnerabilities and strengthening crisis preparedness.
Macroprudential policy settings remain appropriate
The Council discussed the outlook for housing-related risks to financial stability. Tighter financial conditions had contributed to declines in housing prices and deteriorating sentiment in the housing market. The Council noted indications of stress among borrowers remained limited and most households appeared resilient to a range of adverse economic outcomes.
The RBA provided its annual advice on financial stability and macroprudential policy, noting that it was supportive of APRA’s recent decision to keep macroprudential policy settings unchanged given the current environment and outlook. APRA’s policy settings, including debt-to-income (DTI) limits and serviceability buffers, were viewed as important in guarding against a build-up of vulnerabilities and supporting system resilience over the medium term.
The Council emphasised the need to closely monitor the financial stability implications arising from lending practices and changes in borrower finances.
CFR agencies continue to work with industry to strengthen resilience of the Australian financial system to operational risks
The operational risk environment continues to evolve rapidly. Rapid technological change, including advances in frontier artificial intelligence (AI), a heightened cyber threat environment and elevated geopolitical tensions had reinforced the importance of efforts by financial institutions and CFR agencies to strengthen cyber and operational resilience across the system.
The Council received an update on inter-agency work to strengthen the resilience of the financial system to operational risks. Critical third parties to the financial sector remain a key systemic vulnerability and the Council discussed progress on mechanisms to address gaps in regulatory oversight.
In that regard, the Council acknowledged collaborative work by the RBA and the National Office of Cyber Security (NOCS) on the Payments Crisis Coordination Framework. The Framework outlines the roles and responsibilities of key industry and government stakeholders in coordinating a response to a cyber security crisis affecting the Australian payments sector. It will be published shortly on the CFR website.
The Council also recognised APRA and ASIC’s work, supported by the Australian Signals Directorate, to engage industry on emerging cyber risks associated with frontier AI, including through roundtables with more than 600 participants from over 380 organisations across the Australian financial system. Members noted the publication of an insights paper for industry, including a preparedness checklist for boards and executives, to support practical action on AI-enabled cyber risks.1
Regulatory coordination remains a key focus for the Council
The Council also discussed a range of other regulatory matters, including developments in private credit markets, cash distribution reforms and financial innovation. The Council agreed that it would be important to continue to maintain close coordination on these issues.
Council of Financial Regulators
The Council is the main coordinating body for Australia's financial regulators. There are four members: the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the Reserve Bank of Australia (RBA).
The Governor of the RBA chairs the Council, and the RBA provides secretariat support. The Council facilitates cooperation and collaboration across member agencies, with the ultimate aim of promoting the stability of the Australian financial system and supporting effective and efficient regulation. In pursuing this aim, the Council also seeks to support competition in the financial system.
The Council is a non-statutory body and has no legal functions or powers separate from those of its individual member agencies. It is a forum for cooperation, underpinned by the commitment of its member agencies to be open, proactive and collaborative. It meets each quarter, or more often if required. For more information, see: www.cfr.gov.au.