Australia updates regulations for better transparency of remuneration practices

APRA will offer flexibility in disclosure timing, requiring annual disclosures within six months of an entity's financial year-end.

The Australian Prudential Regulation Authority (APRA) completed its new regulations allowing authorised deposit-taking institutions (ADIs), insurers, and superannuation entities to disclose information about their remuneration practices. 

The updated Prudential Standard CPS 511 Remuneration stipulates that APRA-regulated entities must annually release details about their remuneration frameworks, design, governance, and outcomes. 

After considering industry feedback from last year's consultation, the new disclosure requirements will take effect for all entities starting their first full financial year after 1 January 2024. 

APRA will offer flexibility in disclosure timing, requiring annual disclosures within six months of an entity's financial year-end.

During the consultation process, APRA also proposed the collection and publication of more detailed remuneration data. 

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APRA will delay its response to submissions on the draft Reporting Standard CRS 511 Remuneration to address industry concerns adequately, with adjustments to the commencement date.

Additionally, APRA will soon release findings from an implementation review of CPS 511 to support the industry in implementing the new regulations.

Larger and more intricate entities will need to provide additional quantitative information, including executive payments and the incorporation of non-financial metrics like risk management.

John Lonsdale, APRA Chair, stated that these changes aim to increase transparency, and market discipline, and highlight the effects of risk failures and misconduct on remuneration results within the financial services sector.