Day 329: 'Oligopolistic rent'
An introductory weekday newsletter from Schwartz Media. Counting the days since the banking royal commission was established.
Good afternoon and welcome to day 329.
Today in summary: a massive data dump from the Hayne royal commission sees banker confessions reach new heights; ASIC pushes for grandfathered financial advice commissions to be scrapped; and senior Westpac banker salaries take a hit thanks to “customer outcome” targets being missed.
-- Charis
Current banker panic level: 😨😨😨😨
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The Hayne royal commission has released more than 215 new documents, including additional responses from the banks to early queries from Commissioner Hayne about misconduct. The documents lay out a litany of misdeeds, including bank staff forging documents, and manipulation of bank systems to trigger staff bonuses. Not all of the information is new, but this is the first time the submissions, which cover 96 companies, have all been offered together.
AFR | The AustralianThe Australian Securities and Investments Commission says ongoing service fees and grandfathered commissions should be scrapped by financial advice firms, a view that is at odds with bank lobby group the Financial Services Council. ASIC’s submission to the Hayne royal commission interim report also backed a proposal to make it the lead regulator in policing the superannuation sector. The Financial Planning Association, which represents independent advisors, agrees grandfathered commissions should go, but is not in favour of removing all ongoing service fees.
Sydney Morning Herald | AFRWestpac’s 2018 remuneration report shows all but one of the bank’s group executives have had their short-term bonuses cut, after failing to meet targets for economic performance, risk management, customer service transformation, and customer outcomes. The bank’s board also linked the remuneration cut to the bank’s share price, which fell 12.5% in the year to September.
Sydney Morning Herald
Today’s burn prize: Australian Banking Association
🔥🔥🔥
“The logic that it’s OK to accrue a degree of oligopolistic rent as long as everyone’s getting some is wrong.”
Productivity Commission Chairman Michael Brennan isn’t convinced by the Association’s “They belong to you” TV campaign.
The Commentariat
ANZ Chairman David Gonski’s move to cut directors fees is more proof he’s not a fully paid up member of the Bankers’ Club writes the AFR’s Karen Maley.
“Gonski's move to cut directors fees is seen as particularly confronting because he tied the ANZ board's pay cut to the evidence of poor behaviour unveiled by the Hayne royal commission.
“Because disastrous conduct was a theme common to all the country's major banks, it inevitably raises the question as to whether other banks should follow Gonski's lead. It's a subject that other bank chairman are desperately keen to avoid.”
For the reading list
What Democrats’ House takeover means for the banks
The new House leadership will likely be able to block any further deregulatory initiatives aimed at scaling back rules faced by US banks.
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