The numerous weaknesses exposed in APRA's prudential inquiry into the Commonwealth Bank are apparent among life insurers and superannuation funds.
The prudential regulator wrote to 36 insurers, super funds and ADIs last June off the back of its findings on CBA, worried they too may not be managing non-financial risks appropriately.
In its Self-assessments of governance, accountability and culture report, APRA asked the following super funds to conduct a self-assessment: AustralianSuper, Commonwealth Superannuation Corporation, Diversa Trustees, First State Super, Mercer Superannuation, Perpetual Superannuation, QSuper, Rest, Cbus and Hostplus.
The life insurers included: AMP Life, Challenger, MLC and TAL Life. As for the banks, ANZ, NAB, Westpac and Macquarie Bank were put under the spotlight.
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Consistent among the findings were the need to improve non-financial risk management; accountabilities were unclear and not enforced effectively; and a risk culture that is not well understood.
APRA also observed gaps were evident between remuneration frameworks and practices, and more work is needed to ensure risk and customer objectives are reflected in remuneration.
APRA deputy chair John Lonsdale said it was interesting to observe the "generally positive assessments boards and senior leadership teams had of their own performance" - even when serious weaknesses were identified.
"Although the self-assessments raised no concerns about financial soundness, they confirmed our observation that industry is grappling to manage non-financial risks, such as culture and accountability," Lonsdale said.
As a result, APRA is considering imposing additional capital requirements after finding institutions' "material weaknesses" in governance and non-financial risks management.
Lonsdale flagged APRA will write to the boards of all participating institutions shortly.
"Boards should expect increased supervisory scrutiny of their institutions as they implement remediation actions. Also, in a number of cases, the weaknesses identified in the self-assessment were sufficiently material that APRA is considering stronger supervisory responses, including the application of an operational risk capital overlay," he said.
He warned APRA's policy agenda for the next 12 months includes strengthening prudential expectations for governance, accountability and culture - as well as focusing on aligning remuneration with prudent risk management outcomes and long-term financial soundness.
APRA will consult on a new prudential standard on remuneration in mid-2019, Lonsdale said.