The Australian Prudential Regulation Authority (APRA) has released a framework for the supervision of conglomerate groups, but implementation will be delayed until after the Financial System Inquiry.

The framework aims to help the regulator mitigate risks to institutions in conglomerate groups that are not adequately covered by current arrangements.

Prudential standards in relation to governance, exposure management, risk management and capital adequacy have been updated.

Implementation will follow the inquiry’s final report in November and the Government’s response.

Conglomerate groups are defined as APRA-regulated institutions with material operations across more than one APRA-regulated industry or one or more non-APRA-regulated sector.

The regulator intends to apply the framework to AMP, ANZ, Challenger, Commonwealth Bank, Macquarie Group, NAB, Suncorp and Westpac.

Chairman Wayne Byres says these eight groups control about 80% of all APRA-regulated institutions’ assets.

“The importance of strong group-wide governance, risk management and capital adequacy is therefore critical, not just to these groups but to the stability of the financial system more broadly,” he said.

“Release of the planned framework is intended to inform the financial industry of APRA’s conclusions following the most recent consultation process and enable interested stakeholders to make informed second-round submissions on the issue to the Financial System Inquiry.”

Mr Byres says revisions to the framework may be required in light of the Government’s response to the inquiry panel’s recommendations.