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APRA has told three of the country’s big four banks to set aside an extra $500 million each until they have strengthened risk management and finished refunding customers for various wrongdoing.

The Australian Prudential Regulation Authority said on Thursday it had written to Westpac, NAB and ANZ to tell them of the additional capital requirements.

“Australia’s major banks are well-capitalised and financially sound but improvements in the management of non-financial risks are needed,” APRA chair Wayne Byres said.

“This will require a real focus on the root causes of the issues that have been identified, including complexity, unclear accountabilities, weak incentives and cultures that have been too accepting of long-standing gaps.”

The move follows APRA’s decision in May last year to apply a $1 billion capital add-on to Commonwealth Bank in response to the findings of the APRA-initiated prudential inquiry into the nation’s largest lender.

Mr Byres said the $500 million add-ons would apply until Westpac, NAB and ANZ had completed their planned remediation to strengthen risk management and closed gaps identified in their self-assessments.

“APRA expects (the banks) to hold themselves to the highest standards of risk governance … their self-assessments reveal that they have fallen short in a number of areas,” Mr Byres said.