APRA Governance Standards – Draft for Consultation

5 days ago
4 min read

With APRA's governance reforms moving from consultation to draft standard, the window to prepare is narrowing. We break down what's changing and what boards should do next.

Hall Advisory’s practical look at APRA’s Governance Proposals in May 2025 challenged regulated entities to be on the front foot for APRA’s proposed updates to governance standards. At that time, APRA was seeking input from the industry on its March 2025 discussion paper.

APRA has now released draft CPS 510 – Governance for consultation, open until 18 August 2026. Feedback will inform the new requirements, likely to take effect from early 2028.

The draft standards incorporate broad industry feedback on APRA’s discussion paper, including amendments to the proposed approach in three areas:

Tenure limit: the draft standard requires a tenure limit of 12 years, up from the initially proposed 10 years. Boards can consider short extensions in limited circumstances.
Independence of directors: The earlier proposal to cap the number of directors who can sit on boards of related companies now requires explicit consideration of intra-group conflicts.
Early engagement with APRA on key appointments (significant financial institutions only): The draft standard will now encourage, but not enforce, engagement prior to appointment of responsible persons.

APRA has also clarified in the draft CPS 510 that entities:

should identify and document the requisite skills that all board members must have, though a skills assessment doesn’t need to be at the individual director level,
should consider perceived conflicts of interest in addition to actual or potential conflicts (this will be guidance only), and
must develop registers of interests and duties, but aren’t required to publish this information.

You can find a copy of APRA’s October 2025 update to industry following consultation here: Governance review update | APRA.

Read the draft CPS 510 – Governance standards (including amended definitions) here: Proposed changes to governance | APRA.

What are the main changes to APRA’s expectations on governance for regulated entities?

APRA seeks to lift the expectations for boards and executives, to ensure regulated entities are overseen by leaders who act decisively and lead effectively through change and uncertainty.

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.

- APRA Chair John Lonsdale

The draft CPS 510 – Governance standard intends to:

strengthen requirements for board governance, conflicts management and the fitness and propriety of directors and executives,
remove duplication in fit and proper reporting now that Financial Accountability Regime (FAR) reporting is in place,
improve flexibility by enabling boards to delegate APRA’s board requirements in other prudential standards, and align governance requirements with other codes and regimes where appropriate, and
harmonise requirements by combining five existing prudential standards into one, and setting consistent governance minimums for all APRA-regulated entities.

Your board wants to be ready for the sharper governance standards – what next?

While the proposed standards are still in draft form and might not take effect for another two years, now is the time to prepare. Boards should be thinking about how to transition effectively to meet the enhanced governance standards by 2028. Acting now will allows for smooth implementation and gives sufficient time to resolve any issues that may arise in bedding down the new requirements.

The four steps we recommended in our previous blog are even more important now:

1. Take stock of your internal capacity

Interpreting these proposals through the lens of your business model, size, and strategy takes resourcing and clear ownership

Assign internal owners for each proposal area (e.g. governance, board renewal, fit and proper assessments).
Weigh up whether external support would help you translate APRA’s expectations into practical actions. If you’re considering bringing in specialist skills, a good starting point is The Outsourced Chief Risk Officer: what boards need to know.

2. Start planning, even before the rules are final

The final standards aren’t expected until late in 2026, early planning can prevent rushed changes down the track.

Map the changes most likely to make the final cut, such as director tenure limits or board skills review requirements.
Build these expectations into your board renewal, skills matrix and review planning cycles now, balancing continuity of knowledge with board renewal as you go.

3. Prepare to put change into action

Once final standards and guidance land, a deliberate approach to implementation will help you manage your obligations well.

Plan a staged approach that integrates with existing governance frameworks and business planning.
Assign clear ownership for implementation, with regular progress reporting to the board.
Review board and committee charters early, rather than revising everything under time pressure later.

4. Revisit your board performance review process

Independent triennial reviews will soon be mandatory for significant financial institutions. Even outside that group, expectations are rising.

If you’ve stayed with the same board evaluation provider for some time, a fresh perspective can surface insights you might otherwise miss.
Use review findings to shape skills planning, succession and overall board effectiveness, not just to satisfy a compliance requirement.

How we can help

Hall Advisory works with boards and executive teams to strengthen governance frameworks that are compliant, effective, practical and tailored to your organisation.

We can support you with:

Policy and framework development, implementation guidance and independent reviews (governance, fit and proper, and conflict management)
Independent board performance assessments
Board renewal planning and skills matrix development and reviews
Submission preparation and regulatory engagement strategy
Strategy, risk and compliance alignment with Financial Accountability Regime (FAR) and prudential standards.

Be prepared for APRA’s governance reforms. Use this time to reflect on your board’s current state, review what’s changing, and respond with a plan before APRA finalises the standards.

If you’re looking to assess your readiness, plan your response or uplift your governance frameworks with clarity and confidence, we’re ready when you are.

Get in touch