APRA Plans Governance Overhaul for Financial Sector

The Australian Prudential Regulation Authority is preparing a comprehensive review of governance standards for banks, superannuation funds and insurers. This initiative aims to tighten rules on key appointments and conflicts of interest but may also challenge the operational flexibility of financial institutions.


APRA's consultation paper, expected within months, will propose updates to its governance framework. This follows concerns about industry practices and a decade-long gap since the last major revision. Implementation is anticipated in 2026, offering stakeholders time to adjust to stricter expectations.


The regulator is reconsidering governance requirements following scrutiny of a high-profile controversy involving a major industry superannuation fund in 2024. Additional APRA-imposed conditions on the trustee prompted an independent review, confirming the board's compliance with requirements but spurring a broader push for reform.


APRA plans to align governance standards across banking, insurance and superannuation sectors while drawing insights from international practices. This tighter focus on directors’ skills, ethics, and eligibility could increase confidence but will require industry-wide adjustments.


The review comes amid contrasting global trends, with the US financial sector moving toward deregulation under its current administration. APRA’s more stringent approach stands in stark contrast, potentially impacting the Australian financial sector's global competitiveness.


Sources: The Australian, APRA, GT Law