Day 368: 'We think they are an outlier'
An introductory weekday newsletter from Schwartz Media. Counting the days since the banking royal commission was established.
Good afternoon and welcome to day 368.
Today in summary: the Coalition wants its response to the Hayne royal commission to ensure bank loan coffers keep flowing; Carsales takes a hit to its car finance business; and ASIC clashes with American Express as the regulator eyes new powers to crack down on irresponsible lending.
-- Charis
Current banker panic level: 😨😨
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Labor politicians have been talking tough this week on their planned response to Commissioner Hayne’s upcoming recommendations (albeit with little real substance), but Treasurer Josh Frydenberg says the Coalition won’t stand in the way of the “free flow of credit”. Frydenberg yesterday told The Australian:
“I’m going to be very conscious when working on the government response to the royal commission to ensure there is a free flow of credit in the economy and we don’t see a tightening there unnecessarily.”
The comments come after the Council of Financial Regulators flagged the importance of lenders continuing to supply credit to the economy while they adjust their lending practices including in response to the Hayne royal commission.
Listed car selling site Carsales says profits from its share in car finance group Stratton are likely to halve to $1 million after a write down of the business value in the face of tightening credit conditions and new lending regulations. Carsales said it still believed the finance market remained “attractive in supporting its core business”. The finance business took a hit in November when ASIC banned “flex” commissions that saw car dealers earn a higher commission when a higher interest rate was charged on a loan.
Consumer finance giant American Express has pushed back on ASIC’s naming and shaming of it in the regulator’s latest review of credit card lending in Australia.
ASIC singled out American Express as being the only one of 10 companies which did not commit to putting a 10% cap on exceeding the credit card limit, however American Express said it did not agree with the content of the report. ASIC Commissioner Sean Hughes was having none of it:
"We think they are an outlier and we would encourage them to look at other credit card companies. If we continue to hear about consumers struggling with credit card debt, we won't hesitate to take firmer action.
"The ball is in Amex's court. If they are unhappy [with ASIC's findings], they know where to come."
From January 1, 2019 credit providers will not be allowed to provide a credit card with a credit limit that the consumer could not repay within three years.
Today’s burn prize: Labor Senator Doug Cameron
🔥🔥🔥
“They've got all these young spivs who've come from the banking sector."
The opposition spokesman for housing and homelessness blames the banking sector influence for industry super finds not being interested in low-cost housing projects.
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