Australian Prudential Regulation Authority consults on eight prudential governance reforms including a 10-year non-executive director tenure limit

The Australian Prudential Regulation Authority published a discussion paper setting out eight proposals to strengthen prudential governance requirements for banks, insurers and superannuation trustees, marking the first major refresh of its governance standards in more than a decade. The package would tighten expectations for board capability, independence and accountability, raise minimum fitness and propriety standards, and streamline the framework toward a single set of governance standards across APRA-regulated industries. Key measures include requiring boards to maintain an appropriate mix of skills and experience aligned to the entity’s strategy; stronger fitness and propriety standards for responsible persons, with significant financial institutions expected to engage with APRA on succession planning and potential appointments; and extending superannuation trustee requirements on managing conflicts of interest to banking and insurance. The proposals also strengthen board independence for entities that are part of a group, clarify the roles of the board, chair and senior management, and introduce a lifetime tenure limit of 10 years for non-executive directors at an APRA-regulated entity. Expectations would be applied proportionately, with reduced requirements in some areas for smaller and less complex institutions, alongside removal of duplicative or unnecessary governance requirements. APRA will take feedback during a three-month consultation period and intends to release updated prudential standards and guidance for formal consultation in the first half of 2026. It aims to publish the updated framework by the beginning of 2027 ahead of commencement by 2028.