The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have announced that they will streamline aspects of the Financial Accountability Regime (FAR) to reduce regulatory burden without lowering accountability standards.
APRA and ASIC say they will remove key functions requirements from the FAR regulator rules; raise the materiality threshold for notifying APRA and ASIC of changes in accountability; and no longer require information on accountable persons’ direct reports in accountability maps.
ASIC will streamline the responsible manager Australian financial services licensing requirements for FAR entities by reducing the requirements to submit evidence of competence from October 2026.
APRA and ASIC will consult on the changes and aim to implement them by the end of 2026.
APRA has also commenced consultation on an updated draft of CPS 510 Governance, which removes duplicated fit and proper reporting now that Financial Accountability Regime reporting is in place.
The new CPS 510 is designed to:
• strengthen requirements for board governance, conflicts management and the fitness and propriety of directors and executives;
• improve flexibility by enabling boards to delegate APRA’s board requirements in other prudential standards, and by aligning 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.
Draft CPS 510 includes a 12-year tenure limit for non-executive directors.
For clarity, tenure includes:
* total time irrespective of whether this has been served in consecutive appointment terms;
* the time an alternate director acts in the capacity as a non-executive director;5 and
* any tenure as a director on a predecessor entity in the event of a merger or transfer.
APRA’s proposal outlines that a Board may approve an extension in each individual circumstance of up to an additional 12 months. APRA proposes that an entity must notify APRA of an extension within 10 days of board approval.
The new standard will be finalised later in 2026 and come into effect in January 2028.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
