The Commonwealth Bank of Australia has apologised to customers and shareholders and promised to become a “better bank” after the financial regulator APRA issued a stinging assessment of its culture.

APRA released a 111-page report on Tuesday in which it found a “widespread sense of complacency” and a failure “to learn from past mistakes” in the bank.

The report concluded that CBA’s financial success had “dulled the senses of the institution” and the bank had “fallen from grace”.

The extraordinary assessment – the culmination of an eight month inquiry into the way CBA is run – followed a nightmare two weeks for Australian banks during which the banking royal commission unearthed a string of scandals in their financial advice divisions.

CBA’s new chief executive Matt Comyn lost no time in responding to APRA’s withering critique, immediately apologising and promising to address all the issues raised by the regulator.

“I apologise to the bank’s customers and staff, our regulators, our shareholders and the Australian community for letting them down,” Mr Comyn said.

“We will make the necessary changes to become a better bank and we will be transparent about our progress. This includes establishing a much higher level of accountability and consequence for our actions and the impact we have on customers. This starts with me.”

Investors liked what they heard, buying CBA stock and pushing the share price up 1.7 per cent as of 2.50pm.

What the report said

The main finding of APRA’s final report related to what the regulator called “non-financial risks”.

These include risks emerging from human error and the bad behaviour of employees, the risk that the laws and regulations are being broken, and risks that customers are not being served fairly or ethically.

In other words, they highlighted the sort of failures that have been exposed by the royal commission.

The report was particularly critical of the CBA’s leadership, accusing the board of providing “inadequate oversight” and the executive committee of failing to take “ownership of key risks”.

It attacked the bank’s remuneration structure, which it said had “little sting for senior managers and above when poor risk or customer outcomes materialised”.

The report also found the bank had “overly complex and bureaucratic decision making processes that favoured collaboration over timely and effective outcomes and slowed the detection of risk failings”.

In response to the findings, CBA has delivered a so-called ‘enforceable undertaking’ to APRA – a document that sets out how the bank will address the failings. These undertakings are enforceable by APRA.

They include a commitment to set aside an additional $1 billion in reserve capital; an overhaul of how CBA executives’ salaries and bonuses are set; establishing an APRA-agreed remedial action plan; and appointing an independent reviewer to report to APRA on CBA’s progress.

Responding to the report, Treasurer Scott Morrison called the findings “damning”, and said they were “a wake-up call to every board member in Australia”.

“The report, I think, is required reading not only for every financial institution in this country, but, frankly, it should be the next item on the agenda of every single board meeting in this country, regardless of whether you’re a bank or not,” Mr Morrison said.

“It goes to the heart of what responsibilities of board directors are. It’s not a retirement job. It’s a very serious job. I know that there are thousands of board directors around the country who take that job incredibly seriously.”