Laker to lead CBA inquiry

John Laker will lead APRA’s independent inquiry into the culture of CBA.

Former APRA boss John Laker. Picture: James Croucher

John Laker will lead the prudential regulator’s independent inquiry into the culture of Commonwealth Bank.

The former chairman of the Australian Prudential Regulation Authority, along with former chairman of the Australian Competition and Consumer Commission Graeme Samuel and accomplished businesswoman and company director Jillian Broadbent, have this morning been announced as the three panellists who will undertake the six-month inquiry flagged last month by Wayne Byres, who was Mr Laker’s successor.

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

APRA announced the inquiry into CBA’s governance, culture and accountability several weeks after the financial intelligence agency Austrac alleged multiple breaches of anti-money laundering legislation in a Federal Court statement of claim.

Austrac has alleged that CBA, between 2012 and 2015, 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.

CBA and its major bank peers continued to suffer a political backlash yesterday, as the new Labor government in Western Australia threatened to introduce a South Australian-style bank tax if the upper house blocked higher proposed payroll taxes and a royalty hike on gold miners.

Treasurer Ben Wyatt said a levy to raise about $250m a year was also possible if the Turnbull government failed to address the state’s low GST share.

“The failure of the GST to provide the expected returns to West Australian taxpayers means this government must continue to consider alternative revenue measures to make up for this GST shortfall,” Mr Wyatt said.

“We will continue consideration of a state-based major bank levy in the absence of genuine GST reform or our Parliament not passing other revenue measures.”

The APRA inquiry into CBA, which spares the other major banks, follows a succession of customer and corporate disasters that have damaged the bank’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 the purpose of the prudential inquiry 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.”

The inquiry panel will be provided with support by APRA, and may obtain other external expertise. The panel will provide a final report to APRA by April next year.