Day 435: 'Desperate can-rattling by ASIC’
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 435.
Today in summary: The Opposition has announced it will launch, if elected, a A$640 million Banking Fairness Fund to give an extra 125,000 people access to free financial counselling each year; KPMG believes Australian fintech will start seeing more investment based on new data that shows good growth in the sector; and ASIC had a ripper day cracking down on misconduct, banning director of Jade Capital Partners Matthew McCrow from providing financial services for five years and permanently banning Sydney insurance broker James Sheehan from providing financial services.
-- Alex
@AlexESampson
Current banker panic level: 🤑😵
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1. The Opposition has announced it will launch, if elected, a A$640 million Banking Fairness Fund for those who need financial counselling to navigate their way through compensation claims for banking misconduct. Labor has committed to double the number of financial counsellors across Australia from 500 to 1000, providing free access for an extra 125,000 Australians a year. Labor’s fund will raise $160m a year for the four-year budget period, directly via a levy from Australia’s biggest banks, with half of the money paying for free financial counselling and the rest going to other efforts to be announced later this week.
2. KPMG believes the tide of investment will start flowing faster for Australian fintech in the wake of new open banking rules and the banking royal commission. The professional services firm believes that despite a huge rise in deals in the US, Australia is still a contender. The Australian Financial Review today quoted new local figures derived from KPMG’s biannual global Pulse of Fintech study, which revealed Aussie fintech spending was up last year, following a drop-off in 2017. The report found a record US$111.8 billion (A$156.4 billion) was invested in fintech firms globally in 2018.
3. In a firm day for a regulator that has been widely criticised lately of being weak, ASIC has banned Matthew McCrow, a director of Jade Capital Partners, from providing financial services for five years, retrospective to January 15 this year. ASIC also cancelled the Sydney-based managed discretionary account service provider’s financial services license and banned another of its directors, James Clinnick, from operating. ASIC said in a statement that it banned McCrow because he was involved in Jade Capital’s breaches of the law. Meanwhile, ASIC has permanently banned former Sydney insurance broker James Sheehan from providing financial services after an investigation found he had engaged in dishonest conduct and “is not of good fame or character”. ASIC also permanently banned Mr Sheehan from engaging in credit activities after the investigation found he is “not a fit and proper person”.
Today’s burn prize: Australian Business Review editor-at-large Alan Kohler
🔥🔥🔥
“The last NAB CEO to be forced to walk the plank was Frank Cicutto in 2004, and he got A$14 million, which would be the equivalent of about $30m today.”
Kohler was discussing axed NAB chief' Andrew Thorburn’s modest exit payment of A$1 million, which represents nothing more than the paying out of his 26-week notice period.
The Commentariat
Australian Financial Review banking and finance columnist Karen Maley discusses the contenders for CEO at NAB, which appear at this stage to be three men and one woman — Craig Drummond (Medibank Private), Mike Baird (former NSW premier & current NAB senior executive), Angela Mentis (NAB's New Zealand CEO), Anthony Healy (former BNZ head & current NAB business bank head).
“After the sharp criticism NAB received in the Hayne royal commission's final report, perhaps the Melbourne-based bank may be looking for an outsider to come in and clean up the bank's culture? Bankers believe that this would be an overreaction. They argue that NAB shouldn't rule out internal candidates, because the problems that were identified by the Hayne royal commission weren't spread across the entire bank. Instead, they tended to be localised in particular areas, such as financial advice.”
The Australian’s business correspondent Richard Gluyas takes a hard look at the scale of investment required in “regulatory manpower and modernisation of the judicial system”, including beefing up Federal Court criminal jurisdiction, in the wake of the royal commission final report. Gluyas warns these changes are “not going to come cheap”.
“After some desperate can-rattling by ASIC, it’s nearing the time for Canberra to send a blank cheque to James Shipton as advance payment for some US-style “perp” walks on the evening news.”
“It’s anyone’s guess how much extra funding ASIC will need, but you can rest assured it will be in the many tens of millions.”
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