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

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

APRA finalises non-capital components of the supervision of conglomerate groups The Australian Prudential Regulation Authority (APRA) has released the final requirements for governance and risk management components of the framework for supervision of conglomerate groups (Level 3 framework), which will take effect from 1 July 2017.

The Level 3 framework has been designed to ensure that APRA’s supervision adequately captures the risks faced by APRA-regulated institutions within conglomerates.

The regulatory body consulted on the new requirements in March 2016 and received four submissions. Minor clarifications to the submitted feedback are included in a response letter released the same day as the final requirements.

APRA has previously announced its intention to apply the Level 3 framework to the following conglomerate groups:  
  • AMP Limited;
  • Australia and New Zealand Banking Group Limited;
  • Challenger Limited;
  • Commonwealth Bank of Australia;
  • Macquarie Group Limited;
  • National Australia Bank Limited;
  • Suncorp Group Limited; and
  • Westpac Banking Corporation.
The regulatory body will formally determine the heads and members of each of the eight Level 3 groups not later than the effectivity date of the new requirements.

Wayne Byrnes, APRA chairman, 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.”

Read about the Level 3 framework, including prudential standards and prudential practice guides on the APRA website.