Analysis of the CBA Royal Commission Report on Misconduct

This report provides an in-depth analysis of the Commonwealth Bank's misconduct, as revealed by the Royal Commission. It examines various areas of misconduct, including consumer lending, financial advice, agricultural lending, and the impact on small and medium enterprises (SMEs). The report details the manipulative practices employed by bank employees to increase their commissions, such as altering loan details and providing unsuitable financial advice. It also explores the underlying causes of the misconduct, such as poor governance, pressure from managers, and lucrative incentives. Furthermore, the report assesses the responses of the Commonwealth Bank, including financial compensation and employee terminations. The overall conclusion highlights the bank's responsibility for the misconduct and its impact on consumers and other stakeholders, emphasizing the need for ethical practices in the financial sector. The report references several academic sources to support its findings and analysis.

Running head: INSTITUTIONAL ASSETS AND LIABILITIES
Institutional Assets and Liabilities
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Table of Contents
Introduction:....................................................................................................................................2
Misconduct/issues on commonwealth bank:...................................................................................2
Causes of the Misconduct/issues:....................................................................................................4
Responses from commonwealth bank:............................................................................................5
Conclusion:......................................................................................................................................5
References and Bibliography:..........................................................................................................6

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Introduction:
The overall assessment aims in evaluating the Royal Commission report for
Commonwealth Bank, which was provided to detect the level of misconduct conducted by the
employees of the bank. The assessment evaluates misconduct or issues that have been conducted
by Commonwealth Bank On the basis of consumer lending, financial advice, agricultural
lending, and small and medium enterprises. The reliable responses from Commonwealth Bank
are also analyses to identify the level of measures that was taken by the bank to ensure the
reduction in misconduct. The report of Royal Commission provided insight on the manipulation
that was conducted by the employees of Commonwealth Bank to further their plans to achieve
higher income from operations.
Misconduct/issues on commonwealth bank:
The nature of misconduct that was conducted by Commonwealth Bank Employees is
depicted as follows.
Consumer lending:
The problems in the consumer lending was conducted by the employees of
Commonwealth Bank for ensuring high level of Commission from the transaction. The
employees of the bank were manipulating the details of the consumers who were applying for
loans. Manipulations were conducted to ensure high incentives provided to the Employees.
Relevant fraudulent activities conducted, such as altering the documents of income proof and

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Collateral assets that was maintained by consumers initiating the loans (Ferguson & Butler,
2014).
Financial advice:
The second nature misconduct was present in the financial Advisors that were provided
by employees of Commonwealth for superannuation or investment funds. The financial advice
that was provided to the consumers relatively focused on generating higher level of incentives
for the employees. The portfolio was not constructed as per the requirement and financial
condition of the consumer, instead it focus only on growth stocks which increased incentives of
the employees.
Agricultural lending:
The third major misconduct that was conducted by the Commonwealth Bank Employees
was in agricultural lending. The overall analysis has relatively indicated that employees of
Commonwealth Bank manipulated the loan amounts boost the level of agriculture lending’s to
the consumers. The value of the loans that was provided to the consumers for agricultural
purposes was a relatively higher, which increase the burden on the farmers regarding the
repayment of loans. The Employees with high level of manipulations in the agricultural lending
process was able to generate higher incentives, which was the main driving force behind the
misconduct (Berg, 2015).
Small and medium enterprises:
The royal Commission report also focus on small and medium enterprises which were
impacted by the decisions made by the employees of Commonwealth Bank. The employees of
the organization was mainly motivated for generating high level of incentives which reduce the

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capability to ensure adequate financial advisers to the small and medium scale businesses. Small
and medium scale businesses were provided high interest loans, which were not required by the
organization. Therefore, from the evaluation it could be identified that improper loan advice was
provided by the employees of Commonwealth Bank to small and medium scale businesses which
increase their financial obligations and hampered their progress.
Causes of the Misconduct/issues:
The main causes for he misconducts that was conducted by the employees of
Commonwealth Bank are depicted as follows.
Low governance:
The main cause of the misconduct that was conducted by the employees of
Commonwealth Bank was influenced by low governance from top level executives. The
Commonwealth Bank Employees were not groomed adequately for detecting the fine line
between misconduct and activities for increasing their incentives. Managers and executive that
was responsible for handling the activities of the employees one not concerned regarding the
unethical measures that was taken for completing the target. The main motive of the managers
and employees targets which reduce the presence of ethical governance in the activities of
Commonwealth Bank (Matthews, 2016).
Force from managers:
The manager’s relative forced the employees of Commonwealth Bank to ensure high
level of banking activities such as loans and financial Advisors provided to the consumers. This

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force and pressure provided on the employees of the organization by managers was the main
reason behind the unethical measures that was taken by the employees to complete the targets.
Lucrative offers:
The lucrative offers provided Commonwealth Bank Employees was also major motivator
for misconducts, as employees to generate high level of revenues from operations were
manipulating the documents of the consumers.
Responses from commonwealth bank:
The major response that was provided by Commonwealth Bank was the payment of $700
million which was conducted after the announcement of Royal Commission Australia. this
measures taken by the management of Commonwealth Bank for ensuring that the activities that
was conducted by the employees was relatively wrong, where the compensation would help in
minimizing the damage conducted from the misconduct. Commonwealth Bank also responded
by terminating the brokers and employees that what is responsible for the production activities
and failed to provide adequate documents during the loan process (Godwin & Schmulow, 2015).
Conclusion:
From the overall analysis of the activities that was conducted why Commonwealth Bank
after the publishing of the report of Royal Commission Australia. Commonwealth Bank was
considered a major contributor to the manipulations that was conducted in the financial sector of
Australia. Consumers were cheated of their money by conducting manipulations and fraudulent
activities which only benefited the employees and the organization and did not help other
stakeholders. The royal Commission insured that attitude response was conducted by

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Commonwealth Bank regarding the activities that was conducted by the employees. Hence,
Commonwealth Bank was responsible for picking up $700 million in damages to the consumers
which were affected by the manipulation of their employees.
References and Bibliography:
Berg, C. (2015). The Curtin-Chifley origins of the Australian bank deposit guarantee. Agenda: A
Journal of Policy Analysis and Reform, 22(1), 21.
Cull, M., & Bowyer, D. (2017). Ethics in Financial Planning: Myth, Fact or Rhetoric
Paradox?. e-Journal of Social & Behavioural Research in Business, 8(2), 56-69.
Ferguson, A., & Butler, B. (2014). Commonwealth Bank facing royal commission call after
Senate financial planning inquiry. Banking and Finance’, The Sydney Morning Herald,
Business Day ed., published by Fairfax Media, Sydney, NSW, 26.
Godwin, A. J., & Schmulow, A. D. (2015). The Financial Sector Regulation Bill in South Africa,
second draft: lessons from Australia. South African Law Journal, 132(4), 756-768.
Jones, E. (2016). Australian trade liberalisation policy: the Industries Assistance Commission
and the Productivity Commission. The Economic and Labour Relations Review, 27(2),
181-198.
Matthews, A. (2016). The financial services industry: Whistleblowing and calls for a royal
commission. Precedent (Sydney, NSW), (136), 35.
Steen, A., McGrath, D., & Wong, A. (2016). Market failure, regulation and education of
financial advisors. Australasian Accounting, Business and Finance Journal, 10(1), 3-17.

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Weller, P. (2015). Policy professionals in context: Advisors and ministers. Policy analysis in
Australia, 23-36.