Draft prudential standards and practice guides released by APRA for consultation provide considerable detail on APRA’s plan to supplant new legislation mandating minimum numbers of independent directors. As we previously reported, all boards of RSE licensees, including employer-sponsored superannuation funds, will be required to have a minimum one-third independent directors and an independent chair on the board under draft legislation proposed by the Federal Government.
Release of the consultation materials by APRA follow the conclusion the Government’s own consultation earlier this year. Significantly, as a result of that consultation, the independence requirements in the draft legislation will no longer apply from 1 July 2016 – they will commence (with a transitional period) when the Act receives royal assent. In a similar vein, APRA expects its prudential standards and prudential practice guides to commence immediately upon their registration.
Accordingly, understanding the changes proposed in draft prudential standard SPS 510 Governance and SPS 512 Governance Transitionis crucial for industry. We have extracted the key components of each instrument below.
Click here to view table.
The timing for compliance with SPS 510 Governance is explained in SPS 512 Governance Transition as follows:
- Date of registration: New governance requirements commence in SPS 510 and SPS 512.
- 1 July 2016: RSE licensees to complete preliminary assessment.
- 1 January 2017: Transition or exit plan (as applicable) to be submitted to APRA.
- Royal Assent + 3 years: All RSE licensee boards must comply with the new governance requirements or have exited the industry.
Subject to passage of the draft legislation and consideration of any submissions received, APRA intends to finalise the prudential standards and prudential practice guides before the end of 2015. Consultation closes on 23 October 2015, with APRA’s consultation package comprising the following documents: