On 16 June 2026, APRA released a consultation paper and draft Prudential Standard CPS 510 Governance, setting out updated requirements to modernise and strengthen governance across banking, insurance and superannuation. Consultation is open until 28 August 2026, with the final CPS 510 and CPG 510 expected in Q4 2026 and the new requirements expected to apply from early 2028.
This stems from the original discussion paper proposing updates to governance prudential standards issued by APRA in March 2025 (March Proposals) which identified sub-standard corporate governance practices in some regulated areas for banks, insurers and superannuation trustees including:
weakness in the skills and capabilities of directors
narrow approaches to assessing and reviewing director fitness and propriety
insufficient attention to board performance assessments
problems stemming from overly long Board and director tenure
inadequate management of conflicts of interest.
The March Proposals sought to strengthen APRA’s core prudential standards and guidance on governance (set out in CPS 510 and SPS 510 Governance, CPS 520 and SPS 520 Fit and Proper, and SPS 521 Conflicts of Interest).
Following a consultation period, in October 2025, APRA subsequently revised some policy positions previously described in the March Proposals, to better achieve stated objectives in response to stakeholder feedback.
The initial material changes to the March Proposals were:
Tenure limit
APRA believes a hard tenure limit is necessary to improve board renewal practices however the tenure limit was extended from 10 to 12 years as it acknowledges that 12 years is more aligned with existing board arrangements and cycles. These limits apply only to a director’s tenure at a specific regulated entity. They do not apply to a director’s total time served across different APRA-regulated entities.
Independence (banks and insurers only)
In the March Proposals, APRA proposed that at least two independent directors (including the chair) on regulated entity boards must not be members of any other board within the group.
APRA has modified that proposal and will not mandate a minimum number. Instead, APRA intends to remove the presumption of independence for directors on multiple group boards (currently set out in paragraph 39, CPS 510). APRA also proposes that intra-group conflicts be explicitly addressed as part of conflicts management and board performance reviews.
Individual director skills
APRA intends to require regulated entities to identify and document the skills and capabilities necessary for the board overall but will not require entities to define requisite skills for each individual director role as otherwise proposed in the March Proposals.
Conflict of interest
In the March Proposals, APRA required regulated entities to consider perceived conflicts, in addition to actual and potential conflicts. APRA has walked this back having regard to risks posed by making it a legal requirement and intends to set this expectation in guidance only. APRA has reinforced its policy that considering perceived conflicts is in line with contemporary practice and regulatory expectations.
Registers of relevant interests and duties (banks and insurers only)
APRA intends to require that all regulated entities should develop a register of relevant duties and relevant interests as a tool for conflicts management. However, APRA will not require insurers and banks publish them.
CPS 510 Governance
On 16 June 2026, APRA also issued an updated draft of CPS 510 for further consultation which aims to strengthen requirements for board governance, conflicts management and the fitness and propriety of directors and executives.
APRA has proposed a consolidated, cross‑industry prudential standard CPS 510 Governance with consistent requirements for all APRA-regulated industries and which picks up five current separate prudential standards:
Governance (CPS 510 and SPS 510)
Fit and proper (CPS 520 and SPS 520)
Conflicts of interest (SPS 521)
APRA will release a related unified prudential practice guide (CPG 510 Governance) when CPS 510 is finalised in late 2026.
Some material features of draft CPS 510 are:
Governance Criteria | Prudential Requirement | Regulatory Objective |
Board Composition | Minimum board size of five for banks and insurers is extended across all APRA regulated sectors. Majority of directors to be ordinarily resident in Australia currently applying to banks and insurers only, will be extended across all regulated entities incorporated in Australia, including foreign-owned. Harmonises minimum for board size and residency across all locally incorporated regulated entities | Allows Boards to have sufficient capacity and breadth of local expertise needed to perform their role. |
Independence (banks and insurers)
| Updates the current independence definition and extends the application of independence requirements within group structures to have a majority of independent directors in all APRA-regulated subsidiaries. Removes the assumption (currently in CPS 510) that a director, assessed as independent at the parent level, is automatically independent on a regulated subsidiary board. CPS 510 independence test to include explicit consideration of actual or potential conflicts arising from intra‑group relationships (and that these are considered both during appointment and on an ongoing basis). | Independent and impartial board judgement, including within group structures. Additionally, that director conflicts arising from other roles in the group are considered during the appointment stage (and on an ongoing basis). |
Board skills and capability
| Requires boards to document collective skills essentials through a structured skills matrix and address gaps over time. CPS 510 requires entities to have board skills matrices, featuring clear assessment criteria, and actively address identified skill or capability gaps. | Boards collectively possess the skills, experience and behavioural attributes necessary to oversee strategy, risk and performance in a complex operating environment. These changes raise the bar for how boards ensure they are equipped to perform their role effectively now and in the future. |
Board renewal and non-executive director tenure
| Introduces a 12-year default tenure limit for non-executive directors, supported by renewal and succession planning requirements Draft CPS 510 includes a 12-year tenure limit for non-executive directors, reflecting an expectation that already exists in APRA guidance for superannuation and private health insurance. Includes total time irrespective of whether served in consecutive appointment terms and any tenure as a director on a predecessor entity in the event of a merger or transfer. Potential approval of 12-month extension to a director’s 12-year tenure subject to APRA notification. | Sustainable board renewal balancing continuity with a Board refresh. This is consistent with market practice, governance cycles, and existing superannuation and private health insurance guidance in SPG 510 and HPG 510 and provides a hard backstop. APRA also proposes that boards can approve an extension of up to 12 months in limited circumstances and must notify APRA where this is pursued. |
Conflicts management
| Establishes a single cross-industry conflicts framework requiring proactive identification, management and monitoring of conflicts. Defines roles and responsibilities, the controls to ensure they fulfil conflicts management obligations, to be reviewed annually. All regulated entities must proactively identify, assess and manage actual and potential conflicts of interest and duty, including those arising from intragroup arrangements. This includes a requirement to maintain a register of potential and actual conflicts | Conflicts managed effectively so decisions are made in the interests of beneficiaries, policyholders or depositors as relevant. Consistent with existing conflicts management requirements in legislation and ASIC’s Regulatory Guide 181 - AFS licensing: Managing conflicts of interest.
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APRA will commence another round of consultation with a 28 August 2026 deadline for submissions, before finalising CPS 510.
Foundational revision of Board governance documents
A number of the proposed changes involve extending existing benchmarks currently only applying some sectors to all sectors APRA-regulated sectors. As a result, Boards of APRA-regulated entities including insurers and banks will be required to revisit and revise foundational governance policies.
APRA has identified a summary of actions required under draft CPS 510 which include the following governance documents and policies:
Foundational Governance Documents
Delegation of authority
Board charter
Board committee charters
Prescribed policies
Management information policy
Board renewal policy and plan
Conflicts management policy
Fit and proper policy
Policies and contractual arrangements supporting whistleblowing and disclosure including required notifications to APRA
Registers and Skills Matrix
Register of actual and potential conflicts, including interests and duties that could reasonably be considered to give rise to or have the potential to give rise to a conflict, and the associated controls to monitor and manage those conflicts
Board skills matrix with clear assessment criteria and proficiency levels.
How to Manage the Change
Insurance and bank boards and superannuation trustees should consider undertaking a CPS 510 readiness review to assess the impact of draft CPS 510 on their governance framework, board documents, skills matrix, conflicts framework, fit and proper processes and renewal planning.
To understand how draft CPS 510 may affect your board governance framework, for assistance in navigating the proposed policy changes and prudential requirements and preparation of a ‘board readiness checklist please contact Michael Bracken - Head of Financial Services.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.
