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CBA completes review, sued by FWO

Commonwealth Bank finalised its three-year action plan by implementing recommendations from a prudential inquiry to improve its governance and culture. At the same time, it has been slammed with court proceedings for underpaying staff over $16 million.

CBA released the thirteenth and final report from its independent reviewer, Promontory Australia, noting all milestones have been assessed as "complete and effective" and all recommendations as closed.

The report found that CBA has more work to do in reducing the complexity of its processes but has made major advances in rebuilding its culture.

"In the long run, however, the success of CBA's response to the inquiry report will be judged not by the quality of revised processes and documentation. It will be judged by outcomes, in particular outcomes experienced by the bank's customers," Promontory's report said.

The reviewer also reiterated that CBA's ongoing success of the plan also hinges on its transition period before returning to business as usual. The transition period has six focus areas including data quality, continuing to improve risk culture and remuneration.

In 2017, APRA announced an independent inquiry into governance, culture and accountability frameworks, including a consideration of the group's organisational structure, governance, financial objectives, remuneration and accountability frameworks.

APRA's final report saw the regulator accept an enforceable undertaking to establish a framework by which CBA will address the full set of recommendations in a timely manner.

Commenting on the outcome of the final report, CBA chief executive Matt Comyn said: "Three years ago we committed to delivering all recommendations in the prudential inquiry final report."

"Completing the Remedial Action Plan is a significant milestone, but we recognise there is still much more for us to do. Our focus is to now demonstrate that the changes we've made are sustained and continuously improved."

However, the storm isn't over for the bank as it was the Fair Work Ombudsman (FWO) alleges CBA and CommSec contravened the Fair Work Act for failing to pay 7425 workers about $16.44 million in wages.

In 2019, CBA flagged to the FWO and ASX that it was completing a review of its compliance with enterprise agreements and identified contraventions.

FWO is alleging that CBA and CommSec breached clauses of its enterprise agreements that required both companies to ensure that staff paid under these agreements and failed to undertake reconciliations which led to staff being paid less than their entitlements between October 2015 and December 2020.

The maximum penalties for CBA and CommSec are up to $666,000 per breach for each company. For all other contraventions, the companies face penalties of up to $66,600 per breach.

"We allege that CBA and CommSec failed to meet their lawful obligations to ensure employees were better off overall, which led to thousands of CBA and CommSec employees across the country being financially disadvantaged year after year," Fair Work Ombudsman Sandra Parker said.

"Businesses have a responsibility to their employees, customers and the Australian community to get it right by prioritising workplace law compliance, investing in their payroll systems and conducting audits. Boards should treat the lawful payment of their employees as a core governance requirement."

Read more: CBACommSecFWOAPRACommonwealth BankFair Work OmbudsmanMatt ComynPromontory AustraliaSandra Parker