APRA names John Laker, Graeme Samuel and Jillian Broadbent to head inquiry into Commonwealth Bank

Former APRA chairman John Laker heads a three-strong panel that will conduct an inquiry into CBA’s culture.

Former APRA boss John Laker. Pic: James Croucher

Bank regulator the Australian Prudential Regulation Authority has announced the appointment of three panel members to conduct the prudential inquiry into the Commonwealth Bank.

Former APRA chairman John Laker, former ACCC chairman Graeme Samuel and businesswoman Jillian Broadbent will undertake the regulator’s injury into the bank’s governance, culture and accountability.

APRA announced the inquiry in the wake of allegations by financial intelligence agency Austrac that CBA breached anti-money laundering legislation.

Dr Laker’s role in the inquiry was tipped in The Australian today.

“APRA is pleased to have secured the services of three highly experienced and credentialed panel members to conduct the prudential inquiry,” APRA Chairman Wayne Byres said in a statement.

“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.”

Ms Broadbent is a former board member of the Reserve Bank of Australia, is on the board of Woolworths, is chair of Swiss Re Life and Health Australia, and chancellor of the University of Wollongong.

Dr Laker is a former APRA chairman, chairman of The Banking and Finance Oath,

an external expert for the International Monetary Fund. He has participated in reviews of banking systems and supervisory arrangements in the US, Israel, Indonesia, and Europe.

Professor Samuel is a former chairman of the Australian Competition and Consumer Commission and a professorial fellow in Monash University’s Business School.

Graeme Samuel

APRA announced it would set up an inquiry into the Commonwealth Bank on August 28 following concerns about the company’s organisational structure and accountability frameworks.

It today also announced the terms of reference for the inquiry, saying it would be examining the bank’s existing frameworks and practices to assess whether the bank’s governance, culture and accountability practices “are conflicting with sound risk management and compliance outcomes”.

It said the inquiry would look into the group’s financial objectives and accountability framework, make recommendations on how issues should be rectified and whether “remedial actions need to be undertaken”.

The panel is expected to report on its findings by April 30, 2018.

The CBA issued a short statement welcoming today’s announcement, adding it looked forward to providing “full co-operation”.

Jillian Broadbent

Austrac last month launched civil court action against CBA, alleging that between 2012 and 2015 it failed to lodge more than 53,000 threshold transaction reports (TTRs) for cash deposits in excess of $10,000 made through its network of smart ATMs.

According to Austrac, some of the deposits were followed immediately by international and domestic transfers. CBA has attributed the compliance breakdown to a coding error, which was corrected in 2015 and enabled lodgement of the missing TTRs with Austrac.

The agency has further alleged that the bank failed to respond to warnings and tip-offs from law enforcement.

The APRA inquiry, which spares the other major banks, follows a succession of customer and corporate disasters that have damaged CBA’s reputation, starting with Storm Financial in 2012, poor financial planning advice in 2014, rejected claims by CommInsure in 2016 and now the Austrac crisis.

Mr Byres said when announcing the probe its purpose was to identify any cultural drivers of the issues, identify shortcomings and ensure the community had a high degree of confidence that the nation’s banks were well-governed.

“The Australian community’s trust in the banking system has been damaged in recent years, and CBA in particular has been negatively impacted by a number of issues that have affected the reputation of the bank,” he said.

“Given its position in the Australian financial system, it is critical that community trust is strengthened.

“A key objective of the inquiry will be to provide CBA with a set of recommendations for organisation and cultural change.”