The Australian Prudential Regulation Authority (APRA) has delayed new rules for conglomerates and moves to harmonise risk management standards across general and life insurers and banks.

The year-long extension to January 1 2015 follows industry protests.

“APRA has had a number of positive discussions with industry and is considering the issues raised,” the regulator says in a statement. “Further, submissions identified several practical constraints to implementing these enhancements by January 1 [next year].”

The draft harmonisation standards include a controversial requirement to appoint an independent chief risk officer and a range of rules covering governance.

APRA still plans to finalise standards including CPS 220 and CPS 510 by the end of this year and will release a prudential practice guide on risk management. But the industry will then have 12 months to implement changes.

An Actuaries Institute submission claimed the proposed rules are too prescriptive and may inflict excessive costs on small insurers.

APRA will also consult further with conglomerates – known as Level 3 groups – before releasing prudential practice guides, reporting standards, forms and instructions.

Standards on risk management and capital adequacy aim to reduce the risk of supervisory blind spots when conglomerate groups diversify outside their primary industries, according to the regulator.

“History has demonstrated that the failure of one entity, regulated or not, within a conglomerate group may damage or even cause the failure of related entities.”

Level 3 groups identified by APRA before January 1 next year will be expected to have implementation plans in place by January 2015.

“Your responsible supervisor will monitor the progress of your implementation plans,” the regulator says in a letter to CEOs of potential Level 3 groups.