APRA Governance Reform: What ADIs, Insurers and Super Funds Must Prepare For

ByOfficer

Last updated: June 2026

If your board secretariat still lodges a fit and proper form every time a director or senior executive joins, the APRA governance reform now in consultation changes the calculus. On 16 June 2026 APRA opened consultation on a redrafted Prudential Standard CPS 510 Governance that pulls five existing standards into one, sets a 12-year tenure limit for non-executive directors, and removes the routine fit and proper forms currently filed for roughly 6,000 individuals. Get the reading wrong and an entity either over-builds for requirements that have moved to guidance, or under-builds for one scheduled to commence on 1 January 2028 under draft CPS 510.

This is the next phase of a review that started with a discussion paper on 6 March 2025. APRA consulted, took submissions, and has now published draft standards materially different from what it first floated, with several of the harder 2025 proposals softened. Reading the June 2026 draft as if it were the March 2025 paper is the first mistake teams make.

The reform reaches every kind of APRA-regulated entity at once: ADIs, general insurers, life insurers, private health insurers, and registrable superannuation entity licensees. One standard, one cross-industry baseline, and that breadth is where the implementation work hides.

Related reading: APRA and ASIC FAR rule changes and the accountability burden

What the APRA governance reform actually proposed in June 2026

APRA released a Governance Review consultation paper and a clean draft of CPS 510 Governance, with submissions due by 28 August 2026. It plans to finalise the standard late in 2026 and expects the requirements in effect from early 2028. A unified prudential practice guide, CPG 510 Governance, follows on finalisation.

The structural move is consolidation: five standards become one. APRA’s own framing lists them as Governance (CPS 510 and SPS 510), Fit and Proper (CPS 520 and SPS 520), and Conflicts of Interest (SPS 521), all folded into a single cross-industry Prudential Standard CPS 510 Governance. APRA also proposes to extend CPS 001 Defined Terms to absorb the superannuation definitions, making CPS 001 the primary reference point for defined terms across industries.

What this does not mean: it does not collapse banking and superannuation into identical obligations. Several requirements still flex by entity type and by significant financial institution status. The consolidation harmonises the baseline; it does not erase the carve-outs. APRA sequences these changes deliberately, much as it did with the IRB accreditation pathway under APS 113.

The fit and proper reporting cut and where FAR fits

The headline relief is the removal of routine fit and proper reporting. APRA proposes that regulated entities no longer lodge routine fit and proper forms, on the basis that it will principally rely on information already provided through the Financial Accountability Regime. APRA states the change means forms are no longer required for 6,000 individuals.

The trap is reading a reporting cut as a standards cut. The fit and proper obligations are being strengthened in CPS 510, not relaxed: draft CPS 510 requires entities to assess skill, character, care, diligence, honesty, integrity, judgement, education, qualifications and experience; for directors and senior officers outside of Australia (SOOAs), time and capacity; conflicts that create a material risk; professional references; and findings of courts, tribunals, regulators, boards, arbitrators, public inquiries or similar bodies.

For reporting teams this is a workflow change before a policy change. If your control framework treats the lodged form as the evidence of an assessment, that evidence has to live somewhere else once the form is gone. For accountable persons, FAR records should be reconciled with the internal fit-and-proper file. For responsible persons not captured by FAR, including auditors, actuaries, RSE licensee secretaries and any APRA-determined responsible persons, the internal fit-and-proper file remains the audit trail. APRA also retains a notification requirement where an entity assesses a responsible person as not fit and proper. For the regime doing the heavy lifting here, our explainer on the FAR accountability and administrative burden changes sets out who is captured and what is reported. Groups also running the UK senior manager regime can map the overlap against our UK SM and CR 2026 reforms guide.

Director tenure: 12 years, not 10

The 2025 discussion paper floated a hard 10-year lifetime tenure limit for non-executive directors. The June 2026 draft raised it to 12 years per regulated entity board, with a board able to approve an extension of up to an additional 12 months in individual circumstances. That two-year shift matters for any succession plan already running against the old assumption.

This is why the draft-versus-discussion-paper distinction is operational, not academic. A fund or bank that built a renewal schedule off the March 2025 10-year figure now has a different number to plan against. The regulation sets the ceiling; it does not require boards to hold directors to it, and forward-looking renewal is still expected.

Independence and conflicts: softer than the first draft

Two of the more contested 2025 proposals were pulled back. For banks and insurers, APRA had proposed that at least two independent directors, including the chair, must not sit on any other board within the group. APRA has not proceeded with that proposal. The June 2026 draft instead removes the current CPS 510 assumption that a director assessed as independent at parent level is automatically independent on a regulated subsidiary board, and requires independence to be assessed for the relevant regulated entity, including actual or potential intra-group conflicts.

On conflicts, the model extends the superannuation conflicts framework to banks and insurers, so a single cross-industry requirement applies. But the harder edges moved. Managing perceived conflicts, as distinct from actual and potential ones, moved to guidance rather than the binding standard. Public conflicts registers were dropped for banks and insurers, which keep registers but need not publish them, while RSE licensees still publish. APRA also dropped mandatory early engagement on significant financial institution appointments, citing process and privacy concerns.

Where teams overreach is by building to the March 2025 text. An entity that stands up a public conflicts register because the first paper implied one, or hard-codes the two-directors independence rule, is building to a draft that no longer exists. Read the 16 June 2026 standard, not the memory of the discussion paper.

Board capability, performance and committees

The skills requirement was also narrowed. The original proposal would have required documented identification of individual director skills. The revised draft steps back to documenting board-level skills and capabilities, with gaps addressed through development and succession planning. The individual-director documentation requirement was dropped.

Board performance review keeps its teeth for the larger entities. Significant financial institutions face an independent third-party assessment of the board, its committees, and individual directors every three years. Entities below that threshold are expected to lift their annual reviews, but in guidance rather than as a mandatory external assessment. For locally incorporated regulated entities, draft CPS 510 requires Board Audit and Risk Committees, and a Remuneration Committee where the entity is an SFI. SFIs must maintain separate Audit and Risk Committees; non-SFIs may combine those committees. All members of Board Audit, Risk and Remuneration Committees must be non-executive directors; this does not prevent others from attending committee meetings.

The common error here is assuming a uniform rule. The separate-committee obligation is calibrated by entity type and significance, so a small insurer and a large super fund do not face the same structure. Map your classification first, then read the committee requirement against it.

What this means for governance reporting and attestations

For Australian reporting and governance teams the timeline runs from now to early 2028. Submissions close 28 August 2026; the finalised CPS 510 and CPG 510 are expected late in 2026; commencement is early 2028. That is a real implementation runway, but also a long window in which the old standards still apply.

The work splits into three streams. First, decommission the routine fit and proper lodgement once the form is retired, moving the evidentiary weight onto FAR records and internal assessment files. Second, reset board renewal and succession against the 12-year tenure limit and its extension. Third, re-read independence, conflicts, committees, and board capability against your entity classification, because the cross-industry standard still flexes by type and significance. Super fund teams should keep this separate from the APRA retirement reporting framework for superannuation: one workstream is governance, the other is data reporting. This is not a new quarterly prudential return, but it is a reporting-change workstream: APRA is consulting on removing routine fit-and-proper reporting forms SRS 520.0 Responsible Persons Information and CRF 520 Responsible Persons under CPS 520. The governance changes also land in board papers, charters, internal assessment files and attestations.

Frequently Asked Questions

When do the new APRA governance requirements take effect?

From early 2028. Consultation closes 28 August 2026, and APRA plans to finalise the standard and its practice guide late in 2026.

Which existing standards are being consolidated into the new CPS 510?

Five: CPS 510 and SPS 510 (Governance), CPS 520 and SPS 520 (Fit and Proper), and SPS 521 (Conflicts of Interest) become one cross-industry CPS 510 Governance. CPS 001 Defined Terms is also extended to include the superannuation definitions.

Does removing the fit and proper forms mean the fit and proper obligations are gone?

No. APRA proposes removing the routine forms, affecting 6,000 individuals, because it will rely on FAR. The fit and proper assessment obligations remain in CPS 510 and are being strengthened, not removed.

What is the new director tenure limit?

A 12-year limit for non-executive directors per regulated entity board, with a board able to approve an extension of up to 12 months in individual circumstances. The 2025 discussion paper had proposed 10 years.

Do banks and insurers now have to publish a conflicts register?

No. Banks and insurers must maintain conflicts registers but need not publish them. RSE licensees continue to publish theirs. Managing perceived conflicts moved into guidance.

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Key Takeaways

  • APRA opened consultation on 16 June 2026 on a redrafted CPS 510 Governance; submissions close 28 August 2026, finalisation is expected late 2026, and commencement is early 2028.
  • Five standards consolidate into one cross-industry CPS 510: CPS 510 and SPS 510, CPS 520 and SPS 520, and SPS 521. CPS 001 Defined Terms is extended to cover superannuation definitions.
  • Routine fit and proper reporting forms are removed for around 6,000 individuals because APRA will rely on FAR; the fit and proper obligations themselves stay and are strengthened.
  • The director tenure limit is set at 12 years per board, up from the 10 years proposed in March 2025, with a possible 12-month extension.
  • APRA softened its first draft: it dropped the two-independent-directors rule, moved perceived conflicts and individual-director skills into guidance, and dropped public conflicts registers for banks and insurers.
  • Requirements still flex by entity type and significant financial institution status, so committee structure, board reviews, and independence are not uniform.

Sources and References

What boards and reporting teams should put on the agenda now

The standard is not final and the numbers can still move during consultation. But the direction is set, and the two changes most likely to survive intact are the consolidation into one CPS 510 and the removal of routine fit and proper lodgement in favour of FAR. Boards can start there: confirm the FAR records carry the weight the lodged forms used to, and reset succession against a 12-year ceiling. Read independence, conflicts, committees, and board capability off the 16 June 2026 draft and your own entity classification, never off the March 2025 paper. Submissions close 28 August 2026.

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.

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