The haphazard governance of Commonwealth Bank and the low opinion of its current leaders with their predecessors received an airing at the financial services royal commission heard yesterday.
"Do you feel that CBA has had the right leaders in the past?" Rowena Orr, counsel assisting bluntly asked Matt Comyn, chief executive of the bank.
"No," Comyn unhesitatingly replied.
Catherine Livingstone, chair of the board of CBA followed her CEO in the witness box and, like Matt Comyn, found herself painting a despondent picture of the work of the prior chair and CEO of the group, Ian Narev.
The members of the audit committee of the board of Commonwealth Bank did not routinely receive copies of internal audit reports, but were left to request these reports, the commission heard.
Comyn agreed with Orr "there was a clear deficiency and gap in the way we operated previously. So why did it take the prudential inquiry for CBA to set a body like this up within its organisation?"
---"It should not have".
"Do you accept that CBA subordinated its executive level oversight of non-financial risk to its oversight of financial risk in the past?"
---"Yes, it did."
Livingstone told the commissioner, Kenneth Hayne: "the chairman of the audit committee provided the briefings on the audit reports. We should have asked for the detailed audit reports but we didn't."
Orr: "During - on your time on the audit committee prior to the prudential inquiry, the APRA prudential inquiry, do you recall anyone on the audit committee ever requesting a copy of an audit report?"
Livingstone: "No, I don't recall that they did."
She confirmed this was the case even after the audit committee heard of red ratings over money laundering and counter-terrorism financing, and the Commonwealth financial planning fee for no service matters.
Speaking more broadly of board practice at Commonwealth Bank during her initial nine months as a non-executive director, Livingstone said "there was very little time allocated for matters which are very important.
"And so [since becoming chair] we extended the time of both committee meetings and the board. And I changed the way the board operated in terms of its agenda …so distinguishing the strategic conversations from the business operations conversations from the compliance conversations, to make sure that we were very focused on the accountability.
"And that's in addition to requesting improvements in the board papers themselves."
Livingstone's appearance yesterday also highlighted that as far back as late 2015, APRA raised "very similar concerns in relation to the way CBA identified, escalated and addressed non-financial risks" as those contained in the report of this year's prudential inquiry into the bank."
She also told Hayne that "we've looked at our director induction program in some detail to make sure that it's a more fulsome induction than it has been in the past, because the briefing pack that was provided was more a description of the organisation and how it runs, as distinct from the issues".