August 28, 2017
The Commonwealth Bank (CBA) will come under the scrutiny of an independent prudential inquiry set up by the Australian Prudential Regulation Authority (APRA) and conducted by an independent panel to be appointed by the regulator.
APRA stated it had yet name the panel members and to finalise the terms of reference for the inquiry but it would focus on governance, culture and accountability frameworks and practices within the CBA group of businesses.
The inquiry would also “…make recommendations as to how they are promptly and adequately addressed. It would include, at a minimum, considering whether the group’s organisational structure, governance, financial objectives, remuneration and accountability frameworks are conflicting with sound risk management and compliance outcomes”.
“A key objective of the inquiry will be to provide CBA with a set of recommendations for organisation and cultural change…”
According to APRA, which is tasked with overseeing the activities of banks, the cost of the inquiry would be met by the CBA and public report would be released within six months of the start of the inquiry. The report would not make specific determinations regarding matters that were the subject of legal proceedings or actions by other regulators.
APRA Chair, Wayne Byres said the prudential inquiry followed a range of issues within the CBA group that have damaged the bank’s reputation and public standing.
“The Australian community’s trust in the banking system has been damaged in recent years, and CBA in particular has been negatively impacted by a number of issues that have affected the reputation of the bank. Given its position in the Australian financial system, it is critical that community trust is strengthened. A key objective of the inquiry will be to provide CBA with a set of recommendations for organisation and cultural change, where that is identified as being necessary,” Byres said.