The Australian Prudential Regulation Authority (APRA) has revised its proposed governance standards for insurers, banks, and superannuation trustees following a comprehensive consultation with industry stakeholders.
The changes reflect feedback received during a three-month engagement process and are intended to balance regulatory objectives with practical considerations for regulated entities.
APRA launched a review of its cross-industry prudential standards earlier this year, marking the first major update to governance requirements in more than a decade.
The consultation involved over 150 organisations through 57 meetings and roundtables, in addition to nearly 80 written submissions from industry participants.
Stakeholders generally expressed support for APRA’s efforts to modernise governance requirements and reduce regulatory overlap.
However, concerns were raised regarding the potential impact of some of the original proposals on board operations and flexibility.
After assessing the feedback, APRA has made several adjustments to its initial proposals. The revised measures include:
APRA also indicated it will clarify expectations around individual director skills, address perceived conflicts of interest, and refine requirements for publishing registers of relevant interests and duties.
APRA chair John Lonsdale emphasised the importance of governance in maintaining financial stability and effective risk management.
“Across our regulated industries, APRA continues to see cases where deficient governance leads to poor prudential outcomes. In strengthening standards of governance, we want to strike a balance between increased prescription in some areas and making sure we retain sufficient flexibility for different business models,” he said.
Lonsdale added that the regulator has listened to industry input and believes the revised proposals will support improved governance without imposing unnecessary constraints.
APRA plans to release updated prudential standards and guidance for further consultation in the first half of next year.
The regulator will continue to engage with stakeholders through meetings and roundtables to understand the implications of the proposed changes for regulated entities.
A comprehensive response to stakeholder feedback, along with draft standards and guidance, is expected in the second quarter of 2026.
In addition to governance reforms, APRA has released a response paper outlining proposed changes to the general insurance reinsurance framework.
The new proposals are designed to provide insurers with greater flexibility in accessing alternative reinsurance solutions, such as insurance-linked securities (ILS), while maintaining a focus on policyholder protection and financial system stability.
The review of the reinsurance framework began in late 2024 in response to challenging market conditions.
APRA stated that its primary goal is to ensure the framework remains robust and adaptable to future developments in the reinsurance market.
APRA will continue to consult with industry participants over the coming months to assess the potential impact of the proposed changes.
Further details and draft standards are expected to be released for consultation in 2026.
