The bulk of Australia’s biggest financial institutions have been forced by the prudential regulator to go through an in-depth review of their culture and governance before the royal commission ends next year.
After coping heavy criticism over a lack of enforcement strategies in the financial sector, the Australian Prudential Regulation Authority has demanded Westpac, ANZ and NAB mimic the landmark cultural investigation of CBA.
Along with major financial institutions, some of the nation’s biggest employer-backed super funds such as Hostplus, Cbus and REST super fund have also been asked by APRA to review their culture. Insurers have also been asked to conduct an audit, including Suncorp, Allianz and health insurer NIB.
APRA famously slapped CBA with a 1 billion dollar capital penalty after their review found CBA guilty of complacency as well as not learning from previous experiences and mistakes.
At the time of the review, APRA said all financial groups will benefit greatly from conducting a self-assessment to figure out if they are following in the footsteps of CBA. Since then, the regulator has demanded that certain companies that represent the largest financial institutions in the nation complete a board endorsed group wide assessment of culture, governance and accountability. These cultural reviews are due by 30th November.
According to The Australian, Westpac said it was taking the review “very seriously” and had contracted an independent firm to ensure its “depth and rigour”.
“We see this as an opportunity to gain insight into strengths, shortcomings and opportunities in relation to Westpac’s frameworks and practices,” the bank said.
NAB chief risk officer David Gall said his bank did not wait for APRA to demand it complete the review, and contracted PwC for the self-assessment.
ANZ in a news review said they are engaging external consultants, ANZ expects their review to be robust seeking to identify areas where there is further improvement.
A blueprint for culture change
The key message from the CBA report is that no organisation can afford to let success blind it to potential weaknesses.
All big companies, and not just financial institutions, should take advantage of the CBA report to review and assess how well their company is running.
Examine how boards can affect real change and achieve better governance at the Culture & Governance in Financial Services conference, 14th & 15th November 2018, Sydney. Hear from Dr. John Laker former APRA Chairman, as he shares his wealth of experience with fellow financial services professionals.