Day 323: 'Better bank' season
An introductory weekday newsletter from Schwartz Media. Counting the days since the banking royal commission was established.
Good afternoon and welcome to day 323.
Today in summary: industry super funds call for a total ban on conflicted remuneration and commissions; NAB profit hit by customer compensation costs; and a pre Hayne royal commission banking umpire is born.
-- Charis
Current banker panic level: 😨😨
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Commissioner Hayne runs the risk of his recommendations being “lobbied away” argues the body representing industry super funds in its submission responding to the commission’s interim report. The sector says this was the case with the 2012 Future of Financial Advice reforms. It wants a ban on conflicted remuneration and commissions, including grandfathered commissions. It also argues advisers should know what’s in the best interests of their clients and therefore shouldn’t need the seven-step “safe-harbour” requirement that it says focuses more on process than outcome.
The AustralianNAB posted a A$5.7 billion full-year profit, down 14% on the back of A$1.1 billon in restructuring and compensation costs. NAB chief Andrew Thorburn said there would be more remediation costs ahead as a result of the Hayne royal commission, along with increased regulatory and compliance costs.
"The royal commission has raised instances where we failed to treat customers with care and respect. We are determined to put things right and are taking steps to build a better bank."
A new mega complaints authority is up and running, and expects to deal with 55,000 complaints in its first year. The Australian Financial Complaints Authority is an amalgamation of the former financial ombudsman service with the credit investments ombudsman. It will also handle superannuation complaints. The body was a recommendation of the pre Hayne royal commission Ramsay review.
Today’s burn prize: Bankers complaining of ‘challenging’ conditions
🔥🔥🔥
“Pity help them if Australia were ever to experience a recession and they were hit with a tsunami of failed loans as jobless rates soared and tens of thousands businesses closed their doors each week.”
The AFR’s Karen Maley conveys the views of banking “old-timers” who think the current lot have it easy.
The Commentariat
The booming US economy is an opportune time for the banking sector to benefit from considered deregulation writes Eugene Ludwig, former comptroller of the currency under the Clinton administration. He says given the credit cycle’s natural ups and downs, this period of deregulation won’t last long. The government should start by eliminating regulatory duplication.
“Banks need one set of supervisors and rules to follow, not several covering the same issues. Having one agency accountable for each institution would improve outcomes. For example, one agency should be in charge of examination and supervision at each bank, not multiple. One agency should be in charge of ratings and enforcement at each institution, perhaps considering a collective multiagency view.”
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