By Luke Geary, Partner

On 8 April 2026, the Australian Parliament passed the National Disability Insurance Scheme Amendment (Integrity and Safeguarding) Act 2026 (“NDIS Amendment”), marking a decisive shift in the National Disability Insurance Scheme’s (“Scheme”) regulatory framework.[1]

The Amendment follows as the second tranche of legislative reform following both the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability (“Royal Commission”) and the Independent Review into the National Disability Insurance Scheme (“Independent Review”). Both reports identified significant regulatory gaps in the Scheme’s ability to detect and respond to concerning behaviours promptly.

As the Scheme has expanded, so too have concerns of fraud and exploitative business practices. Fraud within the Scheme is a significant concern, with estimates ranging from $2 billion to an eye-watering $8 billion (approximately 17% of the Scheme’s budget) each year being misappropriated as at late 2024.[2]

The NDIS Amendment therefore follows as a necessary response to these growing risks. As noted by the Minister for the NDIS, Jenny McAllister in the Amendment’s media release, “the NDIS is meant to be a disability support scheme, not a get rich quick scheme”.[3]

Key Takeaways

The NDIS Amendment seeks to do the following things:

1. Strengthen the penalty framework to ensure a fit-for-purpose penalties and offences framework to deter people from doing the wrong thing and providers from providing poor quality and unsafe services and supports.
2. Ensure unsuitable persons can be excluded from providing services in the Scheme by adding categories of people against whom a banning order can be imposed.
3. Restrict a person from engaging in promotional conduct in connection with the NDIS where that conduct undermines the objects or principles of the Act by adding a new power allowing the Commissioner of the NDIS Quality and Safeguards Commission (“Commissioner”) to issue an anti-promotion order.
4. Strengthen the NDIS Commission’s powers to obtain relevant information from NDIS providers and other persons within appropriate, shorter than the ordinary minimum timeframes.
5. Provide participants wishing to withdraw from the Scheme with additional safeguards and additional communication options
6. Enable the NDIA to move to an entirely electronic claiming system for NDIS providers.
7. Ensure that plan variations can result in an increase or decrease in total funding amounts in plans.

Strengthening the Enforcement Framework:

The NDIS Amendment introduces new civil penalties and criminal offences and increases maximum penalties. Most notably:[4]

• ‘Serious contravention’ provisions have been introduced which are met when a person demonstrates conduct that involves a ‘significant failure’ or is part of a ‘systematic pattern of conduct’. Serious contraventions attract a civil penalty of up to 10,000 penalty units, currently amounting to $3,300,000.
• Tiered penalty provisions for unregistered individuals and corporate entities who provide support to participants. Criminal penalties include imprisonment for 2 years or 120 penalty units ($39,600) or both. A strict liability offence attracts a penalty of 60 penalty units ($19,800), and civil penalties of up to 10,000 penalty units for a serious contravention ($3,300,000) or 250 penalty units in any other case ($82,500).
• New civil penalties of up to 60 penalty units ($19,800) for a failure to comply with information gathering requests and 120 penalty units ($39,600) for knowingly providing false or misleading information to the Commission.
• The Commissioner’s power to make a banning order has broadened to apply to additional categories of persons. As noted by the NDIS Quality and Safeguards Commissioner Louise Glanville, the ability to ban auditors and consultants is critical to removing unscrupulous operators from the Scheme.[5]
• Penalties for breaching a banning order now attract a criminal penalty of 5 years or 300 penalty units ($99,000) or both, and civil penalties of up to 10,000 penalty units ($3,300,000) for a ‘serious contravention’ and in any other case, 500 units ($165,000).

The introduction of the tiered penalty regime enables a more nuanced and informed regulatory response. The fit-for-purpose penalty structure aims to strengthen deterrence and ensures consequences are commensurate with potential harms.

Antipromotion Orders

The NDIS Amendment establishes a new power for the Commissioner to issue an ‘antipromotion order’. Such provides the Commissioner with the power to prohibit or restrict a person from engaging in unregulated promotional conduct.

These powers are intended to prevent:

• Businesses from using advertisement and promotional materials to mislead NDIS participants about how they can use their allocated funds, particularly for short term respite.
• Providers from making exaggerated claims about potential Specialist Disability Accommodation returns, aggressively marketing investment opportunities with yields ranging from 10% to over 20%.
• People advertising the sale of NDIS registered businesses in an unethical way that raises concerns about the continuity and quality of care for participants, the potential for exploitation or misuse of NDIS funds by those seeking to profit from the Scheme, and the commodification of participants for profit.[6]

Breach of an anti-promotion order carries a civil penalty of 250 penalty units ($82,500).

90-day Cooling Period

Many participants are steered toward the Scheme through channels such as the justice system, mental health services or post a life-altering event. This well-meaning push into the Scheme can leave individuals feeling disconnected from decision making and without self-determination. Such over-reliance is sometimes misguided.

In addition to this, participants may which to leave the Scheme because they no longer need support, their eligibility has changed or are opting for home care / age care services.[7]

Participants of the Scheme are now required to notify the CEO of the NDIA in writing if they no longer wish to be a participant. Upon this notification, a minimum cooling-off period of 90 days will apply.

The CEO will confirm receipt of the request in writing and provide information about consequences of no longer being a participant, options to cancel the withdrawal and clarification that the person will be withdrawn after the cooling-off period has ended.

This period gives participants and the NDIA time to confirm that the decision to leave is genuine, in the participant’s best interest, and will not result in harm.

Participation to be Slashed

On 22 April 2026, Federal Health Minister Mark Butler announced cuts to the NDIS, aimed at bringing the projected cost of the Scheme down to $55 billion by the end of the decade.[8]

A move away from diagnosis-based eligibility for the Scheme is projected to result in about 160,000 people losing supports, amid other cost-cutting measures.[9] This will be achieved by developing new NDIS eligibility criteria and ensuring there is greater consistency in how people are functionally assessed for the Scheme.

The changes are projected to save the budget $22 billion over the forward estimates, while avoiding a $13 billion projected blow-out over the same period.[10]

Minister Butler said the lack of integrity in the system had opened the door to the “worst parts of organised crime”.[11]

What do These Changes Mean Going Forward?

For NDIS providers, these reforms signal a clear shift in expectations. Providers may experience:

• An increase in regulatory exposure and compliance obligations; and
• Stronger deterrence frameworks and increased scrutiny of internal systems; and
• The 90-day cooling period may complicate projected budgets and staff allocation.

Providers should carefully review their compliance frameworks in light of the increased penalties and expanded enforcement powers.

For NDIS participants:

• Individuals who apply to the NDIS from 1 January 2028 will need to meet the new criteria to be able to access the NDIS.
• All individuals who receive higher-risk supports (services where the risk of harm to a participant is elevated i.e., complex health supports and specialist accommodation) will need to choose a registered provider for those supports. This might include personal care, daily living supports, and support provided in closed settings.
• It is hoped that participants will be less likely to be subject to fraudulent or unethical and exploitative practices by providers.
• Participants seeking to withdraw from the Scheme are provided additional time to consider the risks and consequences of withdrawing.

As these reforms take effect in practice, it will be important to monitor how they operate in real time. Attention will now turn on the Senate’s response to the third tranche of NDIS reform proposed through the National Disability Insurance Scheme Amendment (Securing the NDIS for Future Generations) Bill 2026, and the broader implications these changes have on providers and participants. Watch this space.

 

[1] National Disability Insurance Scheme Amendment (Integrity and Safeguarding) Act 2026.

[2] Josh Hanrahan, “NDIS ripoffs ‘rampant’”, Sunday Mail, Brisbane, 12 January 2025, p. 15.

[3] Parliament passes tough new laws to protect the NDIS from fraudsters, predators and shonks | Health, Disability and Ageing Ministers | Australian Government Department of Health, Disability and Ageing

[4] *all civil penalties are calculated by reference to the Penalty unit amount as at the date of this article*

[5] Integrity and Safeguarding Bill to strengthen regulatory powers | NDIS Quality and Safeguards Commission.

[6] Revised Explanatory Memorandum – NDIS Integrity and Safeguarding Bill 2025, page 21.

[7] Guide to leaving the NDIS | NDIS.

[8] Minister Butler speech at the National Press Club – 22 April 2026 | Health, Disability and Ageing Ministers | Australian Government Department of Health, Disability and Ageing.

[9] Minister Butler speech at the National Press Club – 22 April 2026 | Health, Disability and Ageing Ministers | Australian Government Department of Health, Disability and Ageing.

[10] Minister Butler speech at the National Press Club – 22 April 2026 | Health, Disability and Ageing Ministers | Australian Government Department of Health, Disability and Ageing.

[11] How will the changes to the NDIS affect me? Five key takeaways from the government’s planned overhaul – ABC News.