APRA finalises non-capital components of the supervision of conglomerate groups

The Australian Prudential Regulation Authority (APRA) has today released final requirements for governance and risk management components of the framework for supervision of banking and insurance conglomerate groups (Level 3 framework).

The new requirements will come into effect from 1 July 2017.



APRA consulted on these requirements in March 2016 and received four submissions. Minor clarifications have been made in response to the feedback provided, with details included in a response letter that has also been released today.



APRA previously announced its intention to apply the Level 3 framework to eight conglomerate groups. APRA will formally determine the Level 3 Heads and members of each of the eight Level 3 groups between now and 1 July 2017 when these requirements take effect.



APRA Chairman Wayne Byres said: ‘the group governance and risk management requirements released today will further strengthen conglomerate groups by enhancing oversight of group risks and exposures, and limiting potential contagion and systemic risks.’



APRA announced in March 2016 that it was deferring capital requirements for conglomerates until a number of other domestic and international policy initiatives are further progressed. APRA does not propose to initiate new consultations on the capital component of the conglomerate framework any earlier than mid-2017.



The Level 3 framework, including prudential standards and prudential practice guides can be found on the APRA website at.