APRA Proposes Streamlined Bank Licensing — Why Non-Bank Lenders Still Fill the Gap

APRA Proposes Streamlined Bank Licensing — Why Non-Bank Lenders Still Fill the Gap

Australia's banking regulator APRA has released for public consultation a new draft licensing framework for locally-incorporated authorised deposit-taking institutions (ADIs), announced on 13 May 2026. The proposal aims to make it more efficient and transparent for new entrants to obtain banking licences in Australia.

What APRA Is Proposing

APRA says the current bank licensing process can be unclear for applicants, with uncertainty around requirements and timelines. The draft framework would provide greater transparency on:

• Application requirements and supporting documentation
• Assessment timelines and decision criteria
• Capital and operational thresholds for new bank entrants

The consultation is open until 27 May 2026.

Why This Matters — and What It Won't Change

More efficient bank licensing could, over time, result in additional banking competition in Australia. However, there are important nuances for borrowers to understand.

What won't change immediately: New banks take years to build lending infrastructure and national reach. This is a long-term structural reform, not an immediate market shift.

Who it doesn't help: Borrowers that MPFG Capital serves — self-employed individuals, new migrants, PR holders, and those with complex income situations — are not primarily excluded from the market due to a lack of banking options. They're excluded because of how banks assess income.

Traditional banks, regardless of how many there are, apply assessment frameworks that require PAYG payslips, two years of tax returns, and employment confirmation. No amount of new bank licences changes this structural reality.

The Non-Bank Distinction

Non-bank lenders like MPFG Capital are not ADIs — we don't take deposits and are not subject to APRA's ADI prudential standards. This regulatory difference enables us to:

• Apply flexible income assessment criteria through Alt Doc loan products
• Work with self-employed borrowers, contractors, and business owners
• Assess applications individually rather than through automated scoring
• Serve borrowers across a wider range of income and credit profiles

Even if Australia doubles its number of banks, the fundamental income documentation requirements that exclude self-employed and non-standard borrowers from mainstream banking remain unchanged. Non-bank lenders exist precisely to fill this structural gap.

What Self-Employed Borrowers Should Know

If you've been declined by a major bank — or haven't applied because you knew standard criteria wouldn't apply — a non-bank assessment may yield a different result.

MPFG Capital can accept income evidence from:

• Business Activity Statements (BAS) — typically 12 to 24 months
• Accountant declaration letters
• Business bank statements showing income deposits

Frequently Asked Questions

What is an ADI?

An Authorised Deposit-Taking Institution (ADI) is a bank, credit union, or building society licensed by APRA to take deposits from the public. Non-bank lenders are not ADIs.

Are non-bank lenders regulated?

Yes. Non-bank lenders holding an Australian Credit Licence (ACL) are regulated by ASIC under the National Consumer Credit Protection Act. MPFG Capital holds ACL 553698.

Why can't banks lend to self-employed people?

Banks can and do lend to some self-employed borrowers. However, their income assessment requires documentation that many self-employed individuals cannot provide (PAYG payslips, standard PAYG tax returns). Non-bank Alt Doc loans offer an alternative pathway.

This article is general information only and does not constitute financial or lending advice. Contact MPFG Capital for a personalised assessment.