APRA sets 12-year limit for financial directors

• The Australian Prudential Regulation Authority announced strict 12-year tenure limits for directors at banks, insurers, and superannuation funds despite strong industry opposition.
• The decision rejects widespread pushback from major financial groups and unions, setting up a compliance challenge before the rules take effect in January 2028.
• The regulator stated that a hard cap is necessary to strengthen board renewal discipline and reduce the risk of executive entrenchment over time.

The Australian Prudential Regulation Authority has finalised a maximum 12-year term limit for board directors to boost governance across the financial services sector.

The watchdog resisted heavy industry criticism from major superannuation funds and unions who argued the cap provides little benefit and causes regulatory overreach.

“Over a long period of time, APRA has observed that problems at our regulated entities can be frequently traced to poor oversight, unclear accountability or weak challenge,” said APRA Chairman John Lonsdale.

The revised standards allow boards to approve a single 12-month extension beyond the 12-year limit if they notify the regulator.

The governance overhaul follows multiple financial scandals in 2024 and 2025 involving alleged market manipulation and union control over retirement savings.

The regulator previously walked back controversial initial proposals that would have given the watchdog an effective veto power over specific board appointments.