APRA has today announced that they have commenced the final phase of their governance review by setting out their proposed updated governance requirements for APRA regulated entities.

Background

In March 2025, APRA began the consultation process, with proposals to modernise its governance requirements. APRA proposed various means of strengthening governance frameworks, which was further revised in October 2025 (see APRA's media releases).

As a reminder, some of the key areas for amendment, as proposed by APRA, included:

1. Lifting requirements to ensure boards have the right mix of skills and experience.
2. Raising minimum standards around the fitness and propriety of responsible persons, along with succession planning and potential appointments.
3. Extending existing requirements in relation to managing conflicts of interests.
4. Strengthening board independence and clarifying APRA's expectations regarding the roles of boards, the chair and senior management.
5. Introducing a lifetime tenure limit for board members.

APRA's response to industry consultation

At the outset, APRA's Governance Review Consultation Paper (APRA's Paper) makes a point of noting that in APRA's experience, it is the entities under stress which often have weak governance, including poor oversight and risk management, and unclear accountability mechanisms. APRA also notes that emerging risks such as artificial intelligence, cyber risk and geopolitical disruption are further testing governance processes. In response to this, APRA's governance proposals aim to set clear and contemporary requirements for boards and senior managers, ensuring APRA regulated entities can continue to maintain trust and stability in an ever-changing environment. 

Here are the key changes you need to know about:

1. Integrated Governance Frameworks. Regulated entities must maintain effective and integrated governance frameworks dealing with roles, responsibilities, board delegation, board size / composition and key governance processes.
2. Sharper definition of ‘independence'. Updates to the definition of independence to ensure independent and impartial board judgement, including within group structures.
3. Skill and Capability Matrix. Regulated entities must document board skills and capability needs in a structured matrix to ensure oversight of strategy, risk and performance and to address any skill and/or capability gaps.  
4. Performance Assessments. Annual performance assessments of board members, committee members and directors to drive continuous improvement.
5. Tenure Limits and Succession Planning. Introduction of a 12-year default tenure limit for non-executive directors, supported by renewal and succession planning requirements, to promote sustainable board renewal and balancing continuity with fresh perspectives.
6. Conflict Management. A single cross industry conflict management framework, which seeks to ensure conflicts are managed in the interests of beneficiaries, policyholders or depositors.
7. Fit and Proper Assessments. Updates to the requirements of ‘fit and proper' persons, including: narrowing the definition of responsible persons to align with those already captured in other legislative frameworks; introducing a requirement to take all reasonable steps to ensure responsible persons are fit and proper (including reassessment requirements) and updates to internal policy documentation.
8. Senior Manager Accountability. Introducing the role of senior managers and ensuring that their activities are consistent with the entity's objectives and culture and that their role is distinct from that of the board.
9. Board and Committee Harmonisation. Establishment of a baseline for board committee requirements and extending risk committee requirements to superannuation entities.

Timeline

APRA will consult on the proposed amendments until the end of August 2026 and has invited market feedback. APRA's current intention is to release the final standard and related guidance in late 2026, with the new requirements expected to take effect from early 2028.

How MM Legal + Can Help

We have been across this reform since it began and are actively preparing to help our clients navigate what's coming. Whether you want to understand what the changes mean for your board, you're considering making a submission to APRA before the August 2026 deadline, or you simply want to get ahead of the compliance curve — we would love to help.

MM Legal+ specialises in financial services governance and regulation. We know your sector, we know your constraints, and we promise it won't feel like talking to a law firm. We will continue monitoring these developments closely and will keep you updated as things progress.

Get in touch — let's talk.