APRA’s prudential inquiry into CBA, announced by APRA on 28 August 2017, has released a progress report ahead of its 30 April 2018 final report.
The panel running the inquiry – consisting of company director Jillian Broadbent, former APRA chairman John Laker and former ACCC chairman Grant Samuel – is looking to understand the reasons behind the “public ‘fall from grace’ of an otherwise iconic and financially very successful Australian financial institution”.
To that end, the panel is seeking to understand “any dynamic between CBA’s financial success and any shortcomings in its responsiveness to and management of risk.”
While the progress report said it was too early to make any conclusions, it does highlight seven issues that have emerged in the panel’s work to date.
These include board responsiveness to emerging risk issues; the influence of the board and senior executives on CBA culture; the complexity of policy and decision-making at CBA; the prioritisation of risk systems at the bank; the capability and accountability for risk management; the resourcing of the compliance function; and the responsiveness of remuneration to risk outcomes, adverse or positive.
To date, the inquiry has completed approximately 60 of 80 planned interviews with current and future CBA staff, with the remainder planned for “coming weeks”.
The interviewees include board directors; relevant C-suite executives; senior management, including executive general managers and general managers; and former CBA board directors and executive staff.
The panel has also conducted 11 staff focus groups involving 100 CBA staff to gauge “behavioural norms” at the bank; a staff survey to help understand the bank’s culture and approach to risk management; a review of more than 10,000 voluntarily supplied documents; and meetings with ASIC, along with plans to talk to other agencies.
The progress report acknowledged CBA’s co-operation with the inquiry, noting that “CBA is undertaking a number of significant remediation initiatives in the risk
management and compliance areas, which the final report will take into account”.
