Superannuation fund boards will face tougher governance expectations under a sweeping overhaul proposed by the Australian Prudential Regulation Authority (APRA), as the regulator seeks to strengthen oversight while reducing compliance burdens.
APRA has commenced the final phase of its governance review, releasing an updated draft of Prudential Standard CPS 510 Governance that would apply across banks, insurers and superannuation funds.
The regulator said the changes are designed to ensure APRA-regulated entities are governed by leaders with the skills, experience and character needed to navigate a more challenging risk environment, while addressing governance weaknesses identified through its supervision activities.
Among the proposed reforms are stronger requirements for board governance, conflicts management and the fitness and propriety of directors and executives, areas that have been a recurring focus for APRA in its supervision of large superannuation funds.
At the same time, APRA is seeking to reduce regulatory burden by removing duplicative fit and proper reporting requirements now that the Financial Accountability Regime is in place. The regulator said the move would eliminate the need to submit forms for around 6,000 individuals.
Additional changes would provide super fund boards with greater flexibility to delegate certain prudential requirements and align governance obligations with other regulatory frameworks where appropriate.
The proposal would also simplify the prudential framework by consolidating five existing governance standards into a single standard that establishes consistent minimum governance requirements across all APRA-regulated entities.
APRA chair John Lonsdale said stronger governance remained critical to the performance and resilience of super funds and other financial institutions.
“Strong governance is fundamental to the safety, resilience and performance of banks, insurers and super funds. Over a long period of time, APRA has observed that problems at our regulated entities can be frequently traced to poor oversight, unclear accountability or weak challenge,” Lonsdale said.
“At a time of rising economic and geopolitical uncertainty, and where new technologies are rapidly changing financial services, our regulated entities need leaders who can respond decisively and effectively to financial stress and operational disruptions.
“Alongside lifting expectations, we’ve sought to strike the right balance between safety and efficiency. In allowing boards more freedom to delegate lower value compliance matters and reducing reporting, our goal is to ensure boards have capacity to direct their attention to the issues of most importance.”
The consultation comes as APRA continues to sharpen its focus on governance, accountability and member outcomes across the superannuation sector, with trustees facing increasing scrutiny over decision-making, operational resilience and risk management.
APRA will consult on the proposed reforms until the end of August, with feedback informing the final standard and accompanying guidance scheduled for release in late 2026. The regulator expects the new requirements to take effect from early 2028.
