THE nation’s banks face even tougher laws after a damning report on the Commonwealth Bank revealed an institution “dulled” by its chase for bigger profits that ignored the complaints of its customers.

The rest of corporate Australia could also face new measures after the Australian Prudential Regulation Authority-commissioned report on the CBA found the bank reduced its focus on customers while also turning a blind eye to internal concerns.

The report, commissioned after revelations that the Commonwealth’s rollout of automatic tellers had been exploited by organised criminals and would-be terrorists for money laundering, found there was a “widespread sense of complacency”, a “reactive stance” to dealing with risks, and the bank had become insular and failed to learn from its mistakes.

Incentives to many staff had effectively led to the bank and its board focusing more on record profits, which last year hit an all-time high of $9.9 billion, rather than a range of risks to the CBA’s reputation.

Customer complaints were ignored as the board and executives chased “customer satisfaction” ratings that directly boosted their chances of getting bonuses that could be up to 11/2 times a staff member’s base pay.

There was a lack of “sting” for senior staff who failed to protect the bank because bonuses effectively rewarded risk-takers rather than encouraged those to watch out for potential dangers.

While the authority said the bank’s new board, under chairwoman Catherine Livingstone, had taken positive steps there were still many areas for improvement.

APRA has forced the CBA to hold an extra $1 billion to cover possible financial problems that may flow from the issues now facing the bank, including big fines related to its automatic teller machines.

Bank chief executive Matt Comyn, who officially started in the post a fortnight ago, said the CBA’s top 500 staff would be given copies of the APRA report and given a week to come back with suggestions on how to improve the institution’s operations. He admitted the report’s findings were confronting.

“This is a report about the failures of senior leadership inside the Commonwealth Bank, including me,” Mr Comyn said.

“The focus has to be on how we are going to change the leadership and the culture of the organisation, starting from the top.”

Mr Comyn will take a $2.2 million pay cut but will still end up with annual remuneration of more than $6 million.

Treasurer Scott Morrison, who says he believes more CBA board members will be forced out of the bank, declared the findings as a “rap sheet” that was damning of the bank and its leaders.

He said while the CBA had much to learn from the report, it should also be a warning to the rest of corporate Australia.

“This should be a wake-up call for every board member in the country, particularly those who are the custodians of the savings and shareholdings of millions of Australians,” Mr Morrison said.

But shadow treasurer Chris Bowen said the APRA report, on top of the royal commission on the financial sector, was proof of Mr Morrison’s shortcomings.