Insights from APRA's governance reform consultation and next steps

APRA has proposed three significant revisions to its March 2025 proposals, addressing the topics that received the most stakeholder feedback — tenure limits, independence and early engagement with APRA. These revisions are intended to reduce implementation burden and improve the practical application of the final standards for regulated entities. APRA will undertake formal consultation on these revisions in Q2 2026.

The three principal changes include:

1. Director Tenure Limits: Tenure limits for non-executive directors will increase from 10 to 12 years, with allowances for short extensions in limited cases. Limits apply per individual regulated entity, not cumulatively across groups.

2. Board Independence: The requirement for banks and insurers to have at least two independent directors (including the chair) not serving on other group boards will not proceed. APRA will instead focus on managing intra-group conflicts via strengthened conflict management and board performance reviews.

3. Early Engagement on Appointments: Mandatory early engagement between significant financial institutions (SFIs) and APRA on key appointments and succession planning will be removed. APRA still considers this best practice but won’t impose a legal requirement due to privacy and process (e.g. timeliness) concerns. 
 
Additionally, to address feedback on unintended consequences and ensure more effective outcomes, APRA has refined three proposals related to director skills, conflicts of interest, and registers of relevant interests and duties. APRA now expects entities to document skills and capabilities for the board overall rather than define skills for each role; perceived conflicts will be addressed via guidance rather than binding rules; and all entities will be required to maintain registers of relevant interests and duties, although banks and insurers will not be required to publish them.

Update your impact assessment 
With more clarity from the regulators, this is the time to refocus your regulatory change program. Deprioritise or shift activities based on the updated proposals and re-align your roadmap, timing and resources with any remaining areas of focus.

Brief the board and reset expectations 
Translate the APRA update into a strategic briefing for the Board. Clearly articulate what has changed, the expected impact and prioritisation and the revised action plan, ensuring full alignment between management and the Board. 

Implement “No Regrets” Governance Uplift 
Act now on improvements that you know will add value regardless of the final standards. Prioritise enhancing your board skills matrix, strengthening conflict management processes and improving the quality of information flowing to the board. This will support with building broader awareness and readiness across the organisation.

Our team brings a range of experience across financial services, accountability and governance, risk and compliance. 

If you have any questions or would like to discuss what these changes may mean for your organisation and how you can start preparing, please reach out to any member of our team: