APRA moves impose expertise requirements on super | Australian Markets

The Australian Prudential Regulation Authority (APRA) has introduced proposed modifications geared toward strengthening prudential governance for superannuation funds, insurers and banks.

The proposed modifications, if permitted, can have a direct affect on the make-up of some superannuation fund boards, significantly with respect to financial experience.

The proposed modifications embody:

• lifting necessities for boards to make sure they’ve the correct mix of expertise and expertise to ship the entity’s strategy
• raising minimal requirements across the fitness and propriety of accountable individuals, and requiring important financial establishments to have interaction with APRA on succession planning and potential appointments
• extending current necessities for superannuation trustees in relation to managing conflicts of curiosity to banking and insurance coverage
• strengthening board independence, particularly in relation to entities which are half of a group
• clarifying APRA’s expectations across the roles of boards, the chair and senior management
• introducing a lifetime tenure restrict of 10 years for non-executive administrators at an APRA-regulated entity.

Commenting on the modifications, APRA chair, John Lonsdale stated efficient governance is key to financial stability.

“The boards of Australia’s banks, insurers and superannuation trustees have enormous responsibilities when it comes to protecting the financial interests of households and businesses. Well-governed institutions are likely to be more resilient in times of stress, while poor governance can create weakness that leads to misconduct, losses and failures. It is no coincidence that almost 80 per cent of entities subject to heightened risk-based APRA supervision have underlying governance problems.”