Financial conglomerates will have to submit data to regulators more often under proposed rules that aim to prevent another AIG-style meltdown.

Quarterly collection from Level 3 conglomerates is essential to adequate supervision, according to an Australian Prudential Regulation Authority (APRA) consultation paper.

The regulator aims to address contagion risk, in which a group’s activities in industries not supervised by APRA threaten the divisions that are.

Level 3 groups’ activities cross industries such as insurance and banking.

During the global financial crisis, AIG’s losses from activities unrelated to insurance threatened the entire company.

The Level 3 framework covers group governance, risk exposures, risk management and capital adequacy. Proposed capital adequacy standards released for consultation last week cover prescribed capital amounts and eligible capital.

Conglomerates must have enough capital to ensure APRA-regulated units can meet their obligations without being affected by risks from other divisions.

The regulator does not plan to publish the information because there are a limited number of Level 3 groups and their diverse character does not lend itself to standardised publications.

For this reason, APRA will not standardise reporting of governance, risk exposures and risk management.

The groups’ supervisors will determine bespoke reporting requirements, which are likely to follow the companies’ internal frameworks.

Consultation on the proposed standards closes on October 31, and APRA will publish final prudential standards in the last quarter.

It aims to release final reporting standards, forms and instructions during the first quarter of next year, with the Level 3 framework due to take effect from January 1 2015.