The Australian Prudential Regulation Authority is seeking submissions on proposed changes to its governance standards for insurers, banks and super trustees. 

APRA says the eight proposals are aimed at addressing current areas of poor practice and will help ensure that all regulated entities are “governed by leaders with the skills, experience and character needed for today’s complex risk environment.” 

The proposals include requiring regulated entities to identify and document the skills and capabilities necessary for their board overall, and for each individual director; extending existing requirements for superannuation trustees in relation to managing conflicts of interest to banking and insurance; and introducing a lifetime tenure limit of 10 years for non-executive directors at an APRA-regulated entity. 

One of the proposed measures around board independence will apply only to insurers and banks. The measure will require that at least two independent directors including the chair are not members of any other board within the entity’s group. 

“APRA’s observation is that the current prudential standard does not take sufficient account of the potential for conflict between the interests of different group entities,” the discussion paper says. 

“At one end of the spectrum, there are groups where interests are well aligned. In these cases, independent directors can serve on multiple boards and not encounter significant conflicts. At the other end, there are groups where interests are not well aligned. In these groups there is much higher potential for conflict between the interests of the regulated entity and other group entities.” 

APRA says in cases where conflicts of interest between parent and subsidiary exist, the regulator has intervened to require actions by restructuring boards, taking specific measures to address conflicts, and appointing additional independent directors. 

The regulator says after the three-month consultation, it intends to release updated prudential standards and guidance for formal consultation in the first half of next year. It aims to publish the updated framework by the beginning of 2027 ahead of it commencing by 2028. 

Closing date for submissions is June 6. 

Click here for the consultation paper.