Day 336: Culture is for boards to worry about
An introductory weekday newsletter from Schwartz Media. Counting the days since the banking royal commission was established.
Good afternoon and welcome to day 336.
Today in summary: Former APRA chair John Laker weighs in on who’s responsible for fixing bank culture; life insurance group AIA has a policy recipe for Josh Frydenberg, and the federal government gets into the small business loan market.
-- Charis
Current banker panic level: 😨😨😨
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Former APRA chair John Laker has pointed the finger at bank boards over regulators when it comes to responsibility for fixing poor culture. Laker said organisational culture was "squarely the responsibility of boards, in the first instance, and while regulators might be more interested in risk culture right now, banks should not "look to policy makers to develop a prudential standard you can tick" or “expect supervisors to determine an institution's culture… It is the institution itself that must shape and name its culture."
AFRInsurance giant AIA Group has written to MPs and senators setting out an alternative policy to current legislation being considered by the Senate on superannuation. The government wants to restrict life insurance fees being automatically charged on the accounts of young savers and establish a fee limit of 3% on small balance accounts. AIA chief executive Damien Mu said the legislation would create an “insurance underclass”
"The engagement the government has had with the industry on this bill has been very poor. The industry is highlighting to government some significant concerns around unintended consequences here."
In a bid to head off expected credit tightening in the wake of the Hayne royal commission, the federal government will spend $2 billion on a securitisation fund to invest in small and medium enterprise credit. Treasurer Josh Frydenberg said the fund would be classed as an asset, so wouldn't increase the nation's net debt burden, but Labor and financiers said the plan was light on detail.
AFR | SBS
Today’s burn prize: Josh Frydenberg
🔥🔥🔥
“It's called the Australian Business Securitisation Fund, not the world's most exciting name, Josh.”
2GB talkback presenter Chris Smith isn’t impressed with the marketing of the government’s latest thought bubble.
The Commentariat
The AFR had editorialised against overdoing the punishment of banks in the wake of the Hayne royal commission. It gives the Federal Court’s move to throw out a A$35 million fine that Westpac had agreed to accept for using automatic lending systems as an example.
“This courtroom debacle is a sobering reminder of the hazards in pressing the banking royal commission to require regulators to resort to hard-edged litigation more often. For there is no compelling evidence to suggest that Australia's big banks have irresponsibly or systematically lent to down-and-out borrowers who have little prospect of repaying their loans.
The government’s small business loans fund is “nonsense parading as economic policy”, writes The Australian’s John Durie.
“Do Frydenberg and Morrison see the conflicts of their actions in taking more money from the banks and hence reducing supply for new loans, while bemoaning the lack of loans?”
For the reading list
Overhaul of UK's poor banking culture is slow, admits standards chair
Little progress has been made on fixing the UK’s poor banking culture, five years on from a major industry inquiry meant to address lender misconduct.
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