The Australian Prudential Regulation Authority (APRA) is consulting on proposed new remuneration disclosure and reporting requirements for all banks, insurers and superannuation funds regulated by APRA.

The proposed remuneration requirements will support the cross-industry Prudential Standard CPS 511 Remuneration (CPS 511), which was published last year and will commence progressively starting 1 January 2023.

APRA’s key proposals are:

• APRA-regulated institutions will be required to publicly disclose information on how their remuneration arrangements are designed, and how risk is factored into remuneration outcomes for key executives;
• large and complex financial institutions will be required to disclose how they have placed a material weight on non-financial metrics (such as risk management and conduct) and remuneration outcomes for the Chief Executive Officer, other key executives and material risk-takers;
• APRA will publish centralised statistics to provide greater comparability of remuneration outcomes across APRA-regulated entities, supported by reporting requirements that are proportionate to their size and complexity; and
• the proposed remuneration disclosure and reporting requirements will take effect after the implementation of CPS 511 in 2023 for large entities and 2024 for smaller entities.

Separately APRA as part of the proposed revisions to Prudential Standard APS 330 Public Disclosure (APS 330), APRA would also introduce a centralised publication of key prudential risk metrics to facilitate the comparison and analysis of the capital positions and risk profiles of local banks.

APRA further proposes to remove disclosure requirements relating to prudential risk metrics for smaller authorised deposit-taking institutions (ADIs). Instead, APRA will use the centralised publication to promote transparency and to reduce disclosure requirements for this segment of the banking industry.

The removal of disclosure requirements for small ADIs will take effect in 2023 to align with the new bank capital framework. The disclosure requirements for large banks will take effect from 2024.

CPS 511 commencement timetable

CPS 511 commences:
(a) for an ADI that is a significant financial institution (whether or not the ADI is a member of any group) or a group headed by an ADI or authorised NOHC that is a significant financial institution, on 1 January 2023;
(b) for a general insurer, life company, private health insurer or RSE licensee that is a significant financial institution, or a group headed by such a significant financial institution, or a group headed by an authorised NOHC, a parent entity of a Level 2 insurance group or a registered NOHC that is a
significant financial institution, on 1 July 2023; and
(c) for any other APRA-regulated entity, on 1 January 2024.

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