Day 425: 'Explore the dangerous underbelly of distrust'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 425.
Today in summary: Consumer groups have quit a mortgage broking industry forum, calling industry “disingenuous”; ASIC is preparing to deliver a 10-page response to Kenneth Hayne’s royal commission recommendations at Senate Estimates next week; industry is expecting NAB will make an announcement on its succession plan for axed executives in the next few days; and two of the government’s superannuation bills to reduce fees passed the Senate last night.
-- Alex
@AlexESampson
Current banker panic level: 🙄🙄
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1. Consumer groups have quit a mortgage broking industry forum, saying the “industry isn't interested in doing the right thing by the community and has been disingenuous”. CHOICE, Consumer Action Law Centre, Financial Counselling Australia and Financial Rights Legal Centre have removed consumer representatives from the Combined Industry Forum, an industry initiative to discuss reforms to the mortgage broking sector.
“With many members of the forum now backing the mortgage broking lobby’s political campaign against the royal commission reforms, it is clear that they are only interested in blocking meaningful change. Commissioner Hayne made it clear that upfront and trail commissions create unacceptable risks to consumers and we can’t be part of any process that fails to acknowledge this,” CHOICE chief executive Alan Kirkland said.
Meanwhile, Mortgage Choice chief executive Susan Mitchell has called on Treasurer Josh Frydenberg to initiate consultation with the mortgage broking industry over the banking royal commission recommendations, before any reforms to remuneration are made.
Mitchell said the broking industry has had its entire world changed without any consultation.
“There is no right of reply to the banking royal commission’s recommendations and the industry has significant concerns about the impact on consumers and competition if the changes are implemented without industry discussion," Mitchell said.
2. Top dog at the corporate watchdog James Shipton is preparing to deliver a 10-page response to Kenneth Hayne’s royal commission recommendations at Senate Estimates on Wednesday. The ASIC chair will report on the regulator’s progress on implementing plans designed by its new head of enforcement, Daniel Crennan QC.
“Those that don’t fear ASIC will be making an error. We are now entitled to pursue extremely long custodial sentences (and) very high, crippling penalties,” Crennan said.
3. The Australian is reporting that NAB will make an announcement on its succession plan for axed chairman Ken Henry and chief executive Andrew Thorburn in the next few days.
4. Two of the government’s superannuation bills passed the Senate last night with extensive amendments, including addressing erosion of low super balances by unnecessary fees. However, additional safeguards to protect young and low balance members from unnecessary insurance were dropped from the final bill, including measures to end default life insurance for people under 25, as well as for low-value or inactive accounts. The ditching of the default insurance will save the industry from more than A$2 billion in fee losses.
Read more here.
Today’s burn prize: Roy Morgan CEO Michele Levine
🔥🔥🔥
“Rather than taking solace in the relatively strong levels of satisfaction that the banks still enjoy among their main customers, company directors need to explore the dangerous underbelly of distrust.”
Levine was discussing the latest Roy Morgan Net Trust Score survey which revealed National Australia Bank was the least trusted bank in the country.
The Commentariat
The Australian’s senior banking reporter Joyce Moullakis writes that the race is on to find a sustainable way to provide financial advice in Australia. Moullakis argues the Hayne royal commission has made people cynical about financial advice, with AMP’s poor profit results this week showing the extent of the damage.
“While commissioner Kenneth Hayne didn’t go as far as banning vertical integration, which sees financial services companies able to manufacture and sell their own products, the compliance safeguards he wants will also come with costs.”
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