APRA publishes final investment governance guidance

The Australian Prudential Regulation Authority (APRA) has released final guidance on investment governance for superannuation trustees. The release is the latest step in a two-year process of consultation and reform by APRA to strengthen investment governance practices across the superannuation industry. 

The updated guidance is designed to assist trustees in meeting their obligations under the strengthened Prudential Standard SPS 530 Investment Governance (SPS 530), which came into force on 1 January 2023. 

Prudential Practice Guide SPG 530 Investment Governance (SPG 530) provides: 

• additional guidance to support requirements relating to liquidity management, stress testing and asset valuations; 
  
   
• an outline of how APRA expects trustees will consider environmental, social and governance risk factors as part of their overall investment risk management; 
  
   
• greater clarity in areas requested by industry in applying the standard; and 
  
   
• a more streamlined approach to guidance, bringing SPG 530 in line with APRA’s Modernising the Prudential Architecture strategic initiative. 

APRA Deputy Chair Margaret Cole said: “By making these significant changes, APRA seeks to drive more robust governance of fund investments and ensure trustees put the best financial interests of their members at the centre of investment strategies and decisions.  

“The reforms have been broadly welcomed by trustees, many of whom have sharpened their focus on the valuation of unlisted assets, liquidity management and stress testing in recent months. We note that in some cases trustees have already aligned their investment governance to the draft guidance released for consultation in November 2022,” Ms Cole said. 

APRA announced proposed changes to investment governance prudential standard SPS 530 in September 2021 after an APRA thematic review identified the need for improvement to industry practices. 

A copy of SPG 530 is available on the APRA website at: Prudential Standard SPS 530 Investment Governance in Superannuation.