The Australian Prudential Regulation Authority (APRA) has released a discussion paper containing proposals on supervising conglomerate groups. These are groups with APRA‑regulated entities that have material operations in more than one APRA‑regulated industry and/or have material unregulated entities.

The Level 3 framework contains proposals to ensure that a conglomerate group holds adequate capital to protect the APRA‑regulated entities from potential contagion and other risks within the group. The framework also contains proposals on a range of principles‑based risk management and governance standards that will apply to the parent company of the Level 3 group.

Submissions on the Level 3 proposals are invited by 18 June 2010. Following this initial consultation, APRA will release draft prudential standards and reporting standards to implement the Level 3 framework. These standards will also be subject to public consultation.