APRA on 8 September said that the purpose of the inquiry is to “examine the frameworks and practices in relation to governance, culture and accountability within the CBA group” and to “identify any shortcomings”.
The inquiry follows an announcement in August that AUSTRAC was commencing civil penalty proceedings against CBA for alleged "serious and systemic non-compliance" with anti-money laundering and counter-terrorism financing laws.
The regulator detailed four terms of reference for the inquiry:
- To identify “any core organisational and cultural drivers within CBA that have contributed to these incidents [which have damaged CBA’s reputation]”;
- To assess how or whether CBA’s financial objectives and remuneration structures, risk and compliance management frameworks, accountability framework and frameworks for responding to concerns raised by CBA staff, regulators or customers, are “conflicting with sound risk management and compliance outcomes”;
- To consider whether existing CBA initiatives which aim to improve some of the areas addressed are “sufficient” to respond to the shortcomings identified by the inquiry, and if not, to “recommend” other actions which “need to be undertaken”;
- Additionally, in instances where shortcomings do not have a CBA response in place, the inquiry will recommend “how such issues should be rectified”.
The panel is currently composed of three members: John Laker AO, chairman of the Banking and Finance Oath; Professor Graeme Samuel AC, professorial fellow in the Monash Business School; and company director Jillian Broadbent AO. However, APRA added that the inquiry panel may incorporate advice from external sources “as it sees fit”.
“APRA is pleased to have secured the services of three highly experienced and credentialed panel members to conduct the prudential inquiry,” said Wayne Byres, APRA chairman.
He continued: “Between them, John, Graeme and Jillian bring an excellent blend of skills and experience to the task, including in matters of corporate governance and organisational culture.”
According to APRA, Ms Broadbent has “extensive experience” in governance and risk management, having served on the board of the Reserve Bank of Australia, and been director on the boards of ASX Limited, SBS, Qantas, Coca-Cola Amatil Limited and Woodside Petroleum Limited. Among other positions, she is currently serving on the Woolworths Limited board and is chair of Swiss Re Life and Health Australia Limited.
She will be joined by Dr Laker, who is chairman of The Banking and Finance Oath Limited, an external expert for the International Monetary Fund (IMF) and a member of the External Advisory Panel of the Australian Securities and Investments Commission (ASIC). Additionally, he lectures at Sydney University. Dr Laker was APRA chairman from 1 July 2003 to 30 June 2014.
The panel is rounded out by Professor Samuel, who has previously held the position of chairman of the Australian Competition and Consumer Commission and is currently a professorial fellow in Monash University’s Business School and chair of Monash Business School Business Advisory Board. He is also chair of Data Governance Australia and member of CEDA’s Council of Economic Policy, among other positions.
The Commonwealth Bank has responded to the appointments. In a statement made to the ASX, CBA said that it “notes” APRA’s announcement.
CBA added: “We welcome the appointment of Dr John Laker AO, Professor Graeme Samuel AC and Jillian Broadbent AO and look forward to providing them with our full cooperation.”
[Related: TCorp director joins CBA board]