Day 357: Incapable of detecting misconduct
An introductory weekday newsletter from Schwartz Media. Counting the days since the banking royal commission was established.
Good afternoon and welcome to day 357.
Today in summary: New banking complaints body sees a 47% spike in complaints in its first month of operation; the government talks up open banking as legislation nears; and an independent review found NAB couldn’t detect forex fraud more than a year after it agreed to try stamp it out.
-- Charis
Current banker panic level: 😨
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The Australian Financial Complaints Authority has been receiving about 310 complaints per business day since it opened its doors on November 1. This is an increase of more than 47% when compared to the three predecessor schemes, though AFCA chief David Locke said this was on par with what the group was expecting. Interestingly, Locke said the group was currently investigating 84 definite systemic issues and 4 potential serious contraventions.
“Systemic issues are identified in a complaint or several complaints, and have an effect on people beyond the parties to a complaint. Because of this, we take our responsibility to identify and investigate systemic issues very seriously. Financial firms should be in no doubt that we will be referring and reporting these to the appropriate regulator.”
The federal government will tomorrow introduce its Consumer Data Right law into Parliament, just a day out from heading into recess. Treasurer Josh Frydenberg has been out talking up the benefits of open banking, including helping people navigate the complex banking market. Frydenberg said it would also mean:
“people’s actual circumstances can be more accurately taken into account when engaging with product and service providers.”
The Hayne royal commission revealed poor processes being used by banks for assessing loans. The industry now awaits the ACCC’s rules for open banking, expected later this month.
Reports on evidence documents provided to the Hayne royal commission continue to trickle out, with one from NAB raising eyebrows. An independent review of NAB’s foreign exchange systems, forced on it by ASIC, found the bank’s systems were incapable of detecting misconduct including insider trading, almost 18 months after the bank agreed to try stamp out such behaviour. The report found the bank’s promises to fix foreign exchange problems were not followed through, and when ASIC was advised of the poor progress it agreed to give the bank an extension to act on recommendations.
Today’s burn prize: AMP chief Francesco De Ferrari
🔥🔥🔥
“I feel pretty confident about the robustness of the process that was followed.”
AMP’s new chief executive rules out any changes to the terms of the wealth manager’s $3.3 billion deal to sell its life insurance business, disappointing some shareholders who believe it was sold too cheaply.
The Commentariat
NAB Chairman Ken Henry’s discussion of the problems of capitalism at the Hayne royal commission was wrong writes The Australian’s Janet Albrechtson.
“The real culprit is this intersection of dodgy, lazy cultures within business and regulators. It’s called crony capitalism for a reason. Contrary to Henry’s sermon, Australian companies don’t need a new accountability model. Today’s capitalism works just fine when boards and corporate executives follow the law. It’s already the case, laid down in law that dates back to 1883, that a company and its board have wide discretion, even a duty, to consider stakeholders beyond shareholders when it benefits the company to do so. It’s not rocket science to conclude that looking out for customers benefits the company.”
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