The Australian Prudential Regulation Authority (APRA) has been told to end its “culture of conformity” and tackle risks including cultural issues and cyber threats, and to restructure to create insurance, banking and superannuation divisions.

An independent review highlights the need for a sharper focus on these sectors and criticises a lack of flexibility to respond to rising threats from a complex range of issues.

The capability review, set up after a Hayne royal commission recommendation, found APRA is impressive and forceful on traditional financial risk, but “slow to respond and tentative in addressing issues” elsewhere.

The review report says the creation of three supervisory divisions would reinforce a new culture, and ensure a more efficient structure for overseeing sectors including insurance.

“This will increase senior management’s focus and accountability for dealing with industry-specific issues,” the report says. “It will also strengthen the development of industry skills.”

Supervision is currently split between the Diversified Institutions Division and Specialised Institutions Division.

The report says company inquiries, similar to the Commonwealth Bank investigation triggered by financial advice scandals, should be held more widely under a stronger focus on governance, culture and accountability.

Self-assessments and issues identified during APRA supervision would determine which insurance, superannuation and deposit-taking institutions are targeted for inquiries.

On cyber, the regulator should seek to build strong allegiances with public and private sector experts, other regulators and financial businesses to boost resilience, it says.

The review is critical of APRA’s preference to “do things behind the scenes” and says it should “shift the dial” towards a more strategic and forceful use of communication.

“Some things need to be kept confidential, but APRA should consider what is appropriate to be communicated to the public,” it says.

The review panel was chaired by former Australian Competition and Consumer Commission chairman Graeme Samuel and included Diane Smith-Gander and Grant Spencer. They have made 24 recommendations.

The Federal Government says it will introduce or further examine five recommendations directed its way, including around APRA workplace bargaining and remuneration structures.

It will also consider the need for more funding in next financial year’s budget.

APRA says it supports the 19 recommendations within its mandate, but some will depend on the Government’s response.