Commonwealth Bank shareholders will launch the country’s largest class action over money laundering claims.
AUSTRALIA’S top prudential watchdog today launched a powerful inquiry to repair community trust in the banking system with the target being the Commonwealth Bank.
The Australian Prudential Regulation Authority (APRA) probe was applauded by the Government as an alternative to the Labor Opposition’s demands for a full-blown banking royal commission.
The APRA panel will report in six months on the governance, culture and accountability frameworks and practices within the nation’s biggest banking group.
But the authority has pointed to a broader issue, the growing public distrust in the banking system particularly by the Big Four banks.
It said of the CBA that “given its position in the Australian financial system, it is critical that community trust is strengthened”.
The CBA has recently been accused of sloppy management of dodgy transactions which could have involved money laundering.
Treasurer Scott Morrison promoted the APRA inquiry as a preferred alternative to the royal commission being demanded by the Labor which the Government has rejected as a feast for lawyers which would undermine faith in the banking system here and abroad.
Mr Morrison today said the APRA action would be backed by legislation putting “the toughest community controls on banking executives the country has ever seen”.
And a financial complaints authority would begin to “deal with one of the key issues and grievances” with banks: “When they have a case they can’t get it heard and you need an army of lawyers to deal with it.”
“At the end of the day though this is a matter for the (Commonwealth) bank’s board and this is where APRA has set its task,” Mr Morrison told Sky News.
“To look at the culture within the organisation and whether these series of events we’ve now seen at CBA equates to something else going on in there.”
The APRA chairman Wayne Byres today said the initiate inquiry was sparked by concerns “regarding the frameworks and practices in relation to the governance, culture and accountability within the CBA group”.
Mr Byrnes said the banks reputation had been damaged by recent events.
“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.
“CBA is a well-capitalised and financially sound institution. However, beyond financial measures, it is also critical to the long-run health of the financial system that the Australian community has a high degree of confidence that banks and other financial institutions are well governed and prudently managed.
“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. 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, where that is identified as being necessary.
CBA chair Catherine Livingston welcomed the APRA inquiry and said recent events had “weakened the community’s trust”.