Day 398: 'No one emerges blameless'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 398.
Today in summary: The boffins at Credit Suisse have crunched the numbers on the impact from potential changes to mortgage broker commissions, and the major banks could be in for a windfall; home loan approvals fall less than economists expected in November; and Prime Minister Scott Morrison throws cold water on Peter Costello’s suggestion the Future Fund should manage default super savings.
-- Charis
Current banker panic level: 😨😨
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The major banks stand to gain between A$800 million and A$1.6 billion as a result of likely changes to mortgage broker commissions, according to analysts at Credit Suisse. The Australian reports the analysts considered the cost savings to banks of a move to a flat-fee model with no trailing commissions, a tiered structure, or just an up-front commission. They found ANZ, the Commonwealth Bank, and Westpac stood to save the most. NAB moved to restructure the way it pays broker commissions in September last year. In its note, Credit Suisse tipped the flat-fee model as the likely recommendation from Commissioner Hayne in his final report due February 1:
“Our read is that the commissioner is in favour of the industry moving to a flat-fee model with no trail — the Dutch model — however, there are other models in operation globally.”
Amid dire warnings of a collapse in home lending and house prices stemming from the Hayne royal commission, home loan approvals fell by less than economists forecast in November. Approvals fell by 0.9% in November, Australian Bureau of Statistics figures show, against market expectations of a 1.5% fall. The total value of home loan approvals fell by 2.5%, and the value of investor loans dropped back 4.5% to its lowest level in five years.
Prime Minister Scott Morrison has distanced the government from a suggestion by Future Fund chairman Peter Costello that the Fund manage default super savings. Costello’s idea has the backing of former financial services minister Kelly O’Dwyer, but Morrison yesterday told journalists while he was aware of the idea, it was “not government policy”.
Today’s burn prize: Economics professor Yanis Varoufakis
🔥🔥🔥
“Every significant political actor in this game has an incentive to sit back and let the clock tick down to the bitter end.”
Greece’s former finance minister weighs in on why we’re unlikely to see a simple resolution to the current Brexit mess anytime soon.
The Commentariat
Sydney Morning Herald Senior Economics writer Jessica Irvine propels a week of superannuation distress by urging an end to the “unlucky $3 trillion super lottery” and reminds us again that “no one emerges blameless from the commission’s bleak analysis”.
“The super industry insists that past performance is no guide to future performance. But the commission’s analysis dispels this myth. Good funds tend to be good funds, year after year. Australians have a right to be told which ones they are.”
BT Financial Group superannuation general manager Melinda Howes tells the AFR that some solutions are within grasp, calling for a robust “best in show” model of default superannuation allocation, based on independent and evidence-based assessment.
“The 'best in show' model would, for the first time since the establishment of our default superannuation system, see default selection based on merit alone.”
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