Analysis of CBA Prudential Inquiry: Problems, Impact, and Solutions

This report examines the findings of the Australian Prudential Regulation Authority (APRA) inquiry into the Commonwealth Bank of Australia (CBA). It identifies key problems related to governance, accountability, and culture within CBA, and assesses their impact on financial intermediaries and customers. The report analyzes the role of regulation in addressing these issues, including actions taken by financial firms to identify and resolve problems. It evaluates the success of these action plans and demonstrates practices the financial service industry can adopt to improve in the future. The study emphasizes the importance of sound corporate governance, effective risk management, and clear accountability to ensure the long-term viability and sustainability of financial institutions. The report concludes by summarizing the key issues and findings of the inquiry, highlighting the need for continued efforts to improve the financial services industry.

Banking and Finance

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Problems related with prudential enquiry into CBA....................................................................3
Assessment of how prudential problems impact financial intermediaries and customers...........3
Role of regulation to address culture, governance and accountability problems. ......................4
Actions taken by financial firms to identify and ascertain solution to the problem....................5
Assessing how successful were the action plan...........................................................................5
Demonstrating practices taken by financial service industry in order to improve in future.......5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Australian Prudential Regulation Authority (APRA) focuses on supervising the financial
institution in order operate and supervise them related with licensing, prudential standards,
supervision, enforcement, etc. This study will highlight on types of problems associated with
prudential enquiry in CBA and how it influences financial intermediaries and its customers.
Furthermore, it will also demonstrate the practices taken by financial service industry in order to
improve in future.
MAIN BODY
Problems related with prudential enquiry into CBA.
Australian Prudential Regulation Authority (APRA) analyse the fact that it would
effectively establish the prudential into the governance, accountability and culture within the
Commonwealth Bank of Australia. APRA is the regulatory of various financial service industry.
It takes into consideration credit unions, banks, general insurance, building societies, reinsurance
companies, private health insurance, life insurance, etc. ARPA releases to gain awareness related
with the financial risk of the business in order to effectively analyse the understanding of threat
related with the various financial service industry. It has also faced various climate related
financial risk and also leads to reputation damage, cyclones, regulatory changes, etc. there are
range of requirements within which an organization needs to comply in order to function
effectively. The panel would not be able to focus on non- financial risk. It also leads to lack of
clear accountability (APRA, Prudential Inquiry into the Commonwealth Bank of Australia
(CBA): Final Report, April 2018). The major issue related with APRA is largely related with
quality issues. The report of the CBA was found to be dulled in respect with the management of
non- financial risk. The leaders has slowed down to recognise and address the emerging threats
to the reputation of CBA. This might include mis-selling of loans to the customers in order to
invest in a certain financial products. Misconduct on behalf of financial advisors, fees charged by
the bank for no service in financial industry. Use of outdated policy and definition in insurance
products, breach of contract and anti- money laundering and mis-selling of credit insurance is
also a major problem faced by the CBMA.
Assessment of how prudential problems impact financial intermediaries and customers.
A culture that fosters to leads to unclear decision making, poor leadership, etc. might
result in undermining the governance framework of the organization. The members of the board

must focus on clearly stating the policies which in turn resulted in poor decision making and
ineffective attainment of organizational goals. Financial stability and soundness is one of the
core objective of the APRA. Theses problems has resulted in culture, governance and
accountability problems. These problems largely impact the financial intermediaries and its
customers because there are no clear set of accountability. These problems results in creating
chaos in the organization and leads to various misleading practice. Theses problems adversely
hamper the reputation of the CBA which in turn leads to lower operational growth and
productivity. It also affects the functioning of the business and may also lose its customer.
Prudential problems adversely impact the financial intermediaries as it affects the reputation of
the company and also leads to ineffective report structure.
Role of regulation to address culture, governance and accountability problems.
Sound corporate governance is of utmost importance for the long term viability and
sustainability of the business. Effective risk governance management is useful to focus on the
reliability, quality and independence of the CBA in order manage the risk appropriately. It helps
in encapsulating the roles, functioning and responsibilities of the board in relation with risk
governance. It is very useful in structuring the internal management, control operations and
manage risk throughout the financial service industry. The board of directors must focus on
overseeing the CBA's strategic objective in order to reduce the problems in an effective and
efficient manner . Board must focus on reviewing organizational , governance and management
structure in order to make sure that all the task are performed in systematic manner without
causing any poor customer outcomes. The board also needs to take ownership for the non-
financial risk which mainly includes sustainable performance, brand reputation, innovation, etc.
in order to assure good customer outcomes. It must comply with the Banking Executive
Accountability Regime (BEAR) in order to deliver services in an ethical, aligned and sustainable
manner. Principle based decision must be made in order to focus on good customer outcomes.
The regulators must focus on clear sets of accountability and responsibility in order to make
clear set of decisions which in turn leads to higher operational efficiency and responsibility.
Clear accountability helps in strengthening the effectiveness by clearly stating the roles and
responsibilities of individual.

Actions taken by financial firms to identify and ascertain solution to the problem.
The financial firms focus on reducing unethical and legal practice in the company. By
making strong internal policies helps in effectively preventing the money laundering into the
financial service industry. The employees should focus on effectively maintaining the privacy.
High penalty must be charged in case auditors are found to do any misconduct while carrying out
its duty. In case wrong financial advice is given to the customers, such advisors must be debarred
and must not be given any right to give any financial advice in the future. In case of using
outdated definition in insurance products. The financial service industry must provide services to
the individual according to the current specific policy. Misguiding individuals to carry out the
business in an unethical manner by the experts may results in high penalty. The financial service
industry must comply with all the legal norms and standards in order to take necessary action to
resolve the problem. The organization must have a strong management structure in order to
effectively communicate the plan and make strategic decision in order to eliminate chaos.
Assessing how successful were the action plan.
The action plan carried out was quite successful which in turn resulted in carrying out the
business activity in a systematic and efficient manner. This helps in reducing misconduct and
proving effective report to the board in an efficient manner. Making strong policy helps in
effectively improving the business operation and providing systematic report to the management
and stakeholders. This in turn is very useful in making strategic decision in a systematic and
appropriate manner.
Demonstrating practices taken by financial service industry in order to improve in future.
Industry practice in the financial services can be effectively improved in the future. The
board must focus on aligning all the activities in order to reduce the risk of the management. It
must focus on coordinating all the activities between the risk, remuneration and audit committees
which in turn helps in providing rectified solution to the problem. The board must maintain
higher visibility and assistance by effectively and clearly communicating the course of action in
a systematic and efficient manner at all levels of the organization (APRA, Prudential Inquiry into
the Commonwealth Bank of Australia (CBA): Final Report, April 2018). The board must focus
on increasing the direct engagement with the particular business unit . It must also focus on
receiving adequate and reliable information . This in turn is very useful in receiving the adequate
non- financial information and effectively identifying the emerging risk. The board must focus

on clearly articulating the minimum standards in order to attain higher operational goals and
efficiency. The CBA must focus on complying with the tree level accountable principles which
in turn helps in determining that the business must focus on taking primary ownership for risk
management. CBA must build effective capabilities of the expertise through continuous training
and development. The board must regularly check the activities of the manageable in order to
eliminate unethical and unlawful business practice into the organization. CBA must focus on
improving its decision making process in order to deliver the best services to the customers. The
government should have exercised stronger governance in order to ensure an effective
remuneration framework.
CONCLUSION
From the above conducted study it has been summarized that, Australian Prudential
Regulation Authority (APRA) focuses on supervising the financial institution in order operate
and supervise them related with licensing, prudential standards, supervision, enforcement. This
study focus on critically examining the problems related with prudential enquiry into CBA.
Furthermore, it helps in evaluating how prudential problems impact financial intermediaries and
customers. This study also helps in determining the role of regulation to address culture,
governance and accountability problems. This study critically examines the actions taken by
financial firms to identify and ascertain solution to the problem. It also determine how successful
was the action plan to resolve various problems. Lastly, this study helps in demonstrating
practices taken by financial service industry in order to improve in future.

REFERENCES
Online
APRA, Prudential Inquiry into the Commonwealth Bank of Australia (CBA): Final Report, April
2018. [ONLINE]. Available
through:<CBAPrudentialInquiryFinalReport20181570768477319_redacted_1570775632>