Day 402: 'Courts a weak instrument'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 402.
Today in summary: The Morrison Government today released draft regulations to change the tax rules relating to the operation of certain mutually-owned financial institutions to level the playing field with banks. Listed investment company AFIC said the big four banks are shaping up as “reasonable” return value over the longer term but the Hayne Royal Commission recommendations would have a significant impact on bank share prices. The Australian Financial Review reported ASIC fears endless litigation against banks following the royal commission’s final report.
-- Alex
Current banker panic level: 🤫😤
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1. Thousands of employers may cop a smack from ASIC for getting into bed with underperforming super funds. While offering kickbacks to employers for business is illegal under the Superannuation Industry Supervision Act, an Australian exclusive reveals it hasn’t stopped hoards of employers buddying up with the bottom performing 50 funds – largely retail funds owned by Westpac and ANZ.
“Corporate funds are run by the employer, as opposed to the employer-linked retail funds, which are run by banks and financial institutions but which may carry the employer’s branding or logo. There were no corporate or government funds among the 50 worst performers.”
2. Westpac has announced it will target fintech in a bid to grow the Australian economy. The Australian Financial Review reports that in a new approach to debt financing Westpac will ambitiously expand its footprint from small to medium business lender to “emerging industries” agitator.
3. Shadow Treasurer Chris Bowen has written to the Treasurer requesting the release the final report of the Banking Royal Commission as soon as practicable after it is received by the government on February 1. This comes after Josh Frydenberg last week hinted to The Australian that the government might hold on to the report for a few days.
Today’s burn prize: Philip Crutchfield QC, the ASIC barrister that prosecuted Westpac over interest rate meddling
🔥🔥🔥
“A case which is run and lost may send a much worse enforcement message than a reasonable settlement that enables the regulator to publicise its message to the commercial community."
Lawyers at ASIC could be preparing to lose more court cases.
The Commentariat
Australian Financial Review journalist Aaron Patrick writes that the Hayne royal commission is all good in theory, but it will be a battle to enforce the ensuing banking regulation in practice. He questions whether Hayne even has the stomach for it, and whether the courts are the best weapon to beat the banks into shape.
“It may be hard for Hayne to conceive that the courts, which are the centre of his rarefied professional life, can be a weak instrument to influence corporate behaviour.”
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