ARTICLE · 25 MARCH 2010

APRA Seeks Consultation on Supervising Conglomerate Groups: Taming the Behemoth

Gadens Lawyers

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On 18 March 2010, the Australian Prudential Regulation Regulation Authority (APRA) released a discussion paper containing proposals for a new ‘level 3 supervision framework’ to ensure that conglomerate groups hold adequate capital to protect regulated entities within conglomerates from troublesome risks within the group.

AustraliaInsurance

Greg Moss

Taming the behemoth: APRA seeks consultation on supervising conglomerate groups

On 18 March 2010, the Australian Prudential Regulation Regulation Authority (APRA) released a discussion paper containing proposals for a new 'level 3 supervision framework' (Framework). The Framework builds on APRA's existing capital requirements^[1] to ensure that conglomerate groups hold adequate capital. APRA aims to protect regulated entities within conglomerates from troublesome risks within the group.

The proposed Framework contains proposals on a range of principles based risk management and governance standards that will apply to the parent company of the conglomerate group

In general, APRA will apply the Framework to conglomerate groups containing two or more material entities that are either APRA-regulated entities operating in different industries, or a combination of at least one APRA-regulated entity and at least one material unregulated entity.

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