(Bloomberg) -- Australia’s banking regulator faces a major overhaul after a government-commissioned review found it had a “culture of conformity” and criticized its preference for working behind the scenes to address misconduct.

The scathing report, released Wednesday, found the Australian Prudential Regulation Authority was unwilling to challenge itself, slow to act and tentative in addressing issues that don’t entail traditional financial risks.

The review, headed by former competition regulator Graeme Samuel, was commissioned after an inquiry into misconduct in Australia’s financial industry lashed the banking and securities regulators for failing to hold lawbreakers to account.

Among its 24 recommendations, the review suggested APRA should revise its supervision divisions along industry lines and take a more “assertive” role in communicating its objectives.

It should also create a new superannuation division to monitor the A$2.8 trillion ($2 trillion) pension industry, while the government should consider giving the regulator power to veto the appointment of senior executives and directors of the firms it oversees.

Treasurer Josh Frydenberg said the government agreed to take action on the recommendations directed to it. APRA indicated it would also take actions on the recommendations, Frydenberg said in an emailed statement Wednesday.

To contact the reporter on this story: Peter Vercoe in Sydney at pvercoe@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Andrew Hobbs

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