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Commonwealth Bank to face independent inquiry from banking regulator APRA
It’s APRA who should be investigated for failure to regulate our rotten to the core
Major Banks!
Commonwealth Bank to face independent inquiry from banking regulator APRA
By business reporter Michael Janda
Scott Morrison dismisses calls for banking royal commission (ABC Nes)
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The banking regulator has said it will establish an independent inquiry into the Commonwealth Bank.
Key points:
- Independent panel appointed by APRA to investigate culture, governance and accountability at CBA
- CBA will pay for the cost of the inquiry
- Final report expected to take around six months and be made public
The Australian Prudential Regulation Authority (APRA) said the inquiry would focus on governance, culture and accountability frameworks and practices within Australia's biggest bank.
The APRA inquiry follows Federal Court action by the financial intelligence agency AUSTRAC, which has accused CBA of breaching anti-money laundering regulations on nearly 54,000 occasions.
In addition, corporate regulator ASIC is investigating CBA to determine whether its directors met continuous disclosure obligations to its investors, while a potential shareholder class action against the bank has also been announced.
An independent panel will be appointed by APRA to investigate the bank's practices, with CBA footing the bill for the inquiry.
APRA chairman Wayne Byres said the Commonwealth Bank was financially sound and well-capitalised but a series of scandals had dented public confidence in the institution.
"The overarching goal of the prudential inquiry is to identify any core organisational and cultural drivers at the heart of these issues and to provide the community with confidence that any shortcomings identified are promptly and adequately addressed," he said in a statement.
Treasurer's 'Nike approach'
Treasurer Scott Morrison said he has been talking with APRA and the other financial regulators about the CBA case, but added that the inquiry was not instigated by the Government.
"This is a practical inquiry by APRA, it isn't a show trial," he told reporters at a press conference.
"It isn't a political witch-hunt. It isn't any sort of political process. They are an independent regulator."
Mr Morrison said a pattern of poor regulatory compliance and bad practices by the Commonwealth Bank across several business areas have forced the regulator's hand.
"There hasn't just been one incident here with CBA, there have now been a series of incidents," he added.
Profit at what cost?
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The latest allegations against the Commonwealth Bank highlight a deeply disturbing failure, Ian Verrender writes.
"I think that is what has brought APRA forward, to look at what are the broader issues, here, the organisational issues, the corporate governance issues, and so on."
However, Mr Morrison again dismissed calls from Labor, The Greens and much of the crossbench for a royal commission into the banking system.
"It's not going to get anything happening now, it's just going to kick the issue down the road for another three years," he said.
"The things that a royal commission could potentially recommend, we're already doing that.
"Increased powers and resources for ASIC - tick, done, swoosh.
"Just do it. The Nike approach. That's what we're doing with banks."
CBA welcomes 'opportunity' to 'strengthen trust'
Mr Byres said the Commonwealth Bank has promised its assistance with its inquiry.
"The chairman and CEO of the CBA have assured me that the bank will fully cooperate with the inquiry, and APRA welcomes that cooperation," he said.
The bank put out a statement just after APRA announced its inquiry, confirming its cooperation.
"We have been working hard to strengthen trust, and will continue to do so," chairwoman Catherine Livingstone said.
"We welcome this opportunity for independent parties to review the work we have already undertaken and advice on what more we can do."
The formal terms of reference are yet to be set and APRA said the final report is expected around six months after the inquiry officially gets underway.
APRA said the final report would be made public.