In March 2025, the Australian Prudential Regulation Authority (APRA) published its 'Governance Review – Discussion Paper',  outlining eight key proposals aimed at ensuring that APRA's governance standards set clear, contemporary minimum expectations for board and senior leadership (March Discussion Paper).  See our previous article on the March Discussion Paper here.

APRA’s revised governance proposals: key changes While APRA is continuing to engage with industry on the proposed reforms, APRA has published an update to provide early notice of APRA's revised policy positions aimed at better achieving its objectives. In this respect, APRA plans to make the following three material changes to the proposals set out in the March Discussion Paper:

1. Director tenure and board renewal (Proposal 8 of the March Discussion Paper): APRA initially proposed imposing a lifetime default tenure limit of 10 years for non-executive directors of an APRA-regulated institution. While APRA still holds the view that a hard tenure limit is essential to improve board renewal practices, it has increased the proposed limit to 12 years which is more aligned with existing board arrangements and cycles. APRA is still considering the terms and mechanisms for extensions to the 12-year limit, which would only be available in limited circumstances.
2. Independence (ADIs and insurers only) (Proposal 4 of the March Discussion Paper): The initial proposal required that (in broad terms) at least two independent directors (including the chair) of an ADI or insurer were to not be members of any other board within the group. The rationale for this proposal was to strengthen independence on ADI and insurance boards. While APRA remains committed to improving how intra-group conflicts are managed, it recognises that this original proposal is not appropriate for all entities. Accordingly, APRA will not proceed with this proposal. Instead, APRA intends to remove from CPS 510 the presumption of independence for directors on multiple group boards. This will mean more careful assessment of the independence of a director on an APRA regulated board where that person is also an independent director of a parent entity.
3. Fitness and propriety (Proposal 2 of the March Discussion Paper) – Early engagement on appointments (SFIs only): Under the original proposals, SFIs (and non-SFIs under heightened supervision) were required to engage proactively with APRA on potential appointments of responsible persons. While APRA still considers that early engagement on critical appointments is best practice, APRA will not make this a legal requirement 'given the process and privacy risks'.

Additional clarifications on APRA governance standards APRA has indicated that it will also clarify or adjust three other proposals where stakeholders have identified unintended consequences or suggested better ways to achieve APRA's intended outcome.  

1. Skills and capabilities (Proposal 1 of the March Discussion Paper) – Individual director skills:  APRA initially proposed that regulated entities be required to identify and document the skills and capabilities necessary for the board overall and for each individual director. APRA has now clarified that it will not require entities to define requisite skills for each individual director role, however, APRA still expects entities will have a clear, documented view of the board’s required skills.. The updated proposal is more aligned with current practice and existing guidance as flagged in our previous article.
2. Conflicts management (Proposal 3 of the March Discussion Paper) – Perceived conflicts: Under the original proposals, regulated entities were required to consider perceived conflicts, in addition to actual and potential conflicts. While APRA continues to see value in considering perceived conflicts (which is broadly consistent with the general law position), it now intends to set this expectation in guidance only. 
3. Conflicts management (Proposal 3 of the March Discussion Paper) – Registers of relevant interests and duties (banks and insurers only): It was initially proposed that current RSE licensee conflict management requirements be extended to banks and insurers (i.e., including the requirement to develop registers of relevant duties and relevant interests and make them public). While APRA remains of the view that such registers are important tools for conflicts management, APRA is not convinced of the net benefit of public disclosure for banks and insurers. Accordingly, APRA intends to require all regulated entities (i.e., including banks and insurers) to develop registers of relevant duties and relevant interests, however (unlike RSE licensees) banks and insurers will not be required to publish these registers.

What’s next for APRA governance reforms? Consultation with industry stakeholders will continue over the following months and APRA will issue a comprehensive response to stakeholder feedback on the March Discussion Paper. A draft of APRA's revised standards and guidance will be released in Q2 of 2026.

Please reach out at any time to discuss what the proposed changes could mean for you.