More than three years after giving APRA an enforceable undertaking to fix weaknesses in its governance, culture and accountability, Commonwealth Bank has received sign-off that the program has been completed.
The bank has released the latest report of the independent reviewer of the program, Promontory Australia, which said the weaknesses identified in APRA’s inquiry report have been addressed. The bank has completed all the actions in its remedial action plan.
Promontory said CBA’s board and executive leadership team have upgraded their approaches to oversight and the challenge of non-financial risks.
It said there is greater clarity about accountabilities and risk ownership within CBA. Resourcing and capability of the bank’s operational risk and compliance functions were upgraded.
CBA worked hard to change its previous reactive and insular culture into one that is more pro-active, inquiring and receptive to challenge. The bank strengthened its incentive framework to allow consequences to be more readily applied when poor risk or customer outcomes materialise, the report said.
Promontory said: “The program implemented by CBA to give effect to the remedial action plan was one of the most comprehensive, if not the most comprehensive, reforms of corporate culture in recent Australian memory.
“It was confronting, demanding on staff and resources, and carried out against the backdrop of the pandemic that disrupted both the industry and the country. Despite these challenges, CBA completed the program and achieved outcomes about which many readers of the [APRA] inquiry report would have been deeply sceptical.”
However, Promontory said completing the program was the “short game” and the bank still had to play the “long game”, which includes delivering a number of “non-prioritised components”, providing evidence of sustainability for some of its commitments and “uplifting” program outcomes through continuous improvement.
The bank has made a commitment to carry out further work to reinforce the outcomes of the program.
“The closure of the program was a massive achievement by CBA. While some celebration is entirely reasonable, it is critical that CBA does not allow this to derail the longer-term objective of sustaining what has been achieved,” Promontory said.