Speaking to investors and journalists at an environmental, social and governance briefing on Tuesday, Westpac chief executive Peter King gave details on a number of reforms the bank had implemented.
Westpac has implemented a new program to strengthen its management of risk, called the Customer Outcomes and Risk Excellence Program (CORE), as well as revamping its governance structures – which has changed lines of accountability.
The bank is now structured along key lines of business, such as mortgages, business lending, financial markets and global transactions; with end-to-end accountability for whoever sits at the head of each line.
In home loans for example, Westpac managing director for mortgages Anthony Hughes is responsible for the end-to-end mortgage process, including origination, risk, pricing and service.
“With improved oversight of the mortgage process and clear authority, his decisions have been a major contributor to getting mortgages back on track,” Mr King said.
Meanwhile, the CORE program involves 327 activities and will proceed for multiple years, with focuses including a risk management framework, organisational design and a culture that removes bureaucracy and makes it safe to speak up.
Example activities included implementing statements of accountability for 600 general managers and their direct reports, as well as training programs around risk awareness.
Mr King reported around 200 activities are underway.
“It is a sizeable piece of work that will occupy much of our fixed agenda for the next two years, after which it will wind down,” he said.
The plan was set up last year, but was expanded this year to address the enforceable undertaking with APRA, where the regulator found Westpac had an “immature and reactive” risk culture.
Westpac had also previously run into trouble with AUSTRAC, in a scandal that revealed the bank had made 23 million breaches of Australia anti-money laundering and counter-terrorism financing (AML/CTF) laws.
The case resulted in the highest corporate penalty in Australian history last year, of $1.3 billion and saw the exits of former chief executive Brian Hartzer and longstanding director Ewen Crouch, while ex-chair Lindsay Maxsted brought forward his retirement.
However, the big four bank landed in further trouble under a further AUSTRAC investigation in June last year, after it self-reported additional issues.
More recently, Westpac was warned over failures to flag international transactions as required under AML/CTF laws in New Zealand.
“While we have made good progress on lifting standards, there are some matters we still need to address and this [includes] acknowledging our errors and working with regulators to resolve a number of investigations and close them as quickly as possible,” Mr King said.
“Ultimately, the change needs to drive a future focus, employees acting with authority and less issues for customers.”
Further, he noted Westpac had rebuilt its financial crime area, as one of its most significant changes over the last 18 months.
The bank now has more than 1,300 specialists in the division.
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Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth for InvestorDaily and ifa.