Day 428: 'Never an adequate excuse’
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 428.
Today in summary: Corporate regulator ASIC has filed an appeal with the Federal Court in its case with Westpac; Industry Super Australia is calling on the government to change laws that allow superannuation entitlements to be paid quarterly; wealth manager AMP says it will lose up to A$30 million a year due to changes to superannuation bills passed last week; and NAB is providing a mental health hotline for stressed mortgage brokers worrying about the future of their industry.
-- Alex
@AlexESampson
Current banker panic level: 😓😓😢
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1. Corporate regulator ASIC has filed an appeal with the Federal Court against the decision in a test case over the type of financial advice given to customers about switching their super accounts. In December, the Federal Court found Westpac Securities Administration Limited and BT Funds Management Limited breached the Corporations Act but that ASIC did not make out its case that personal advice was provided to 15 customers. The subsidiaries are not permitted to provide personal financial product advice under their Australian financial services licences, only general advice. It was the first time the court had specifically considered s766B of the Corporations Act which sets out the division between general and personal advice.
ASIC deputy chair Daniel Crennan QC said:
“It is important for a regulator to seek clarity from the court on pivotal statutory provisions within its remit. The dividing line between personal and general advice is one of the most important provisions within the Financial Services Laws.”
2. More changes to superannuation legislation could be on the cards as Industry Super Australia calls on the government to change laws that allow super entitlements to be paid quarterly rather than fortnightly. ISA pointed to new research it had conducted showing Australian workers were losing millions of dollars in interest. The ISA analysis of Tax Office data showed that in 2015 workers lost A$225 million in interest due to the laws. ISA chief executive Bernie Dean said workers were essentially subsiding businesses and providing cashflow at the expense of their retirement savings.
“Every penny counts in retirement, and this interest could be the difference between having enough and going without. It’s not fair, and the rules must change”.
3. Australia's biggest wealth manager AMP has said its operating earnings will be negatively affected by government bills to address the erosion of low super balances by excessive fees. The amended bills passed through the Senate on Friday last week. AMP said it would lose A$10 million in earnings 2018-2019 due to the changes, with an impact of up to $30 million a year from 2020.
Read more about the changes here.
Today’s burn prize: Labor Member for Brand Madeleine King
🔥🔥🔥
“The royal commission into banks was never an adequate excuse to delay these reforms, but now even that's not an excuse. There are no excuses left.”
King was discussing the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2018, which looks to address the problems with payday lending and rent-to-buy schemes. Today was the third time the bill had been brought before the House of Representatives after a first draft was introduced in October 2017.
The Commentariat
The Australian’s business correspondent Richard Gluyas writes that big tech will bring competition to financial services but could affect the stability of the sector. He points to NAB acting chief executive Phil Chronican’s comments in 2013 that “fintech was not a clear and present danger”, but that any such threat could unfold quickly in ways that “we can’t yet predict”. Gluyas posits that the rise of fintech has indeed unfolded in a way that wasn’t predicted and is already having a large impact.
“Companies such as Amazon, Google and Facebook, or the Chinese behemoths Alibaba, Tencent and Baidu, have a huge competitive advantage in their enormous customer bases and strong brand recognition and trust.”
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