The Commonwealth Bank was not an outlier when it came to governance risks, with other financial services companies being found to have similar shortcomings, according to a new report from the Australian Prudential Regulation Authority (APRA).
The APRA Information Paper covering company self-assessments of governance, accountability and culture found that “overall, it is clear that the weaknesses identified in the Final Report of the Prudential Inquiry are not unique to CBA”.
It said a number of common themes had emerged from the self-assessments, including:
· non-financial risk management requires improvement;
· accountabilities are not always clear, cascaded and effectively enforced;
· acknowledged weaknesses are well-known and some have been long-standing; and
· risk culture is not well understood, and therefore may not be reinforcing the desired behaviours.
The APRA report said most institutions had critically examined their organisation, and had committed to a considerable list of actions.
“They have, however, generally rejected the notion that the cultural traits of complacency, insularity and collegiality underpinning the Prudential Inquiry findings are prevalent,” it said.
Notwithstanding this, the regulator said significant uplift was required across industries to bring governance and the management of non-financial risks to an appropriate level.
APRA said it would be meeting with participating institutions and, as a next step, would be writing to the boards of 36 institutions to provide feedback on their self-assessments and outline APRA’s intended targeted supervisory engagement.