APRA has removed the remaining A$500 million of a $1 billion capital add-on it imposed on Commonwealth Bank to address weaknesses in its governance, accountability and risk culture frameworks and practices.

APRA imposed the add-on in 2018, as part of its response to a prudential inquiry into the bank, which found a “widespread sense of complacency” at CBA, “a reactive stance in dealing with risks”, and “being insular and not learning from experiences and mistakes”.

It also found that there were unclear accountabilities, a remuneration framework that rewarded managers even when customer outcomes were poor, and inadequate oversight and challenge by the board and its committees.

The prudential inquiry followed a series of conduct and compliance issues by CBA last decade, including legal action by AUSTRAC over AML/CTF compliance failures, mis-selling of credit card insurance, fees for no service in financial advice, misconduct by financial planners at Commonwealth Financial Planning and mis-selling of margin loans to retail customers to invest in financial products recommended by Storm Financial.

APRA said in a statement on Friday that the capital add-on was reduced to $500 million in November 2020 in recognition of CBA’s progress in addressing the issues raised in the inquiry.

APRA said the remaining add-on was being removed because the bank had completed a full program of remediation, including addressing all recommendations of the inquiry report.

The regulator said it undertook validation work to ensure the bank’s remediations are “sustainable and well-embedded”.

On the bank side, CBA’s managing director Matthew Comyn said in a statement: ““We are committed to ensuring the improvements we’ve made to our governance, culture and risk management practices are continuously improved and sustained.”