The Australian Prudential Regulation Authority (APRA) says remuneration disclosure obligations aimed at increasing transparency and preventing misbehaviour at financial firms will start from next year, with more flexibility on timeframes included following consultations. 

APRA released draft disclosure requirements in July last year and received 23 submissions on the changes, which target shortcomings highlighted during the Hayne royal commission. 

“The financial services royal commission demonstrated conclusively how poorly designed and executed remuneration frameworks can lead to bad outcomes for the community by incentivising the wrong kinds of behaviours,” APRA Chair John Lonsdale said last week. 
 
“One way to combat this is through heightened transparency. The disclosure obligations will shine additional light on how executives are incentivised and on the consequences for poorly managed risk.”  

The updates to Prudential Standard CPS 511 Remuneration require regulated firms to annually publish information on their remuneration frameworks, design, governance and outcomes. 

Larger and more complex entities must disclose additional quantitative information, including on payments to top executives and how they have placed a material weight on non-financial measures such as risk management. 

APRA says that in response to submissions the new requirements will start for all entities from their first full financial year following January 1, with additional flexibility allowing disclosures to be made within six months of their year-end. 

APRA is still reviewing industry feedback on the related reporting standard and says it will provide a more detailed response “in due course”.  

Submissions have raised concerns over the sensitive nature of data to be collected, have outlined potential privacy issues with publication of detailed remuneration details, while also highlighting challenges in gathering the information. 

“APRA’s response to submissions to its consultation on draft Reporting Standard CRS 511 Remuneration will be delayed to ensure issues raised by industry are adequately addressed,” the regulator said. “The commencement date will be extended accordingly.”