Day 436: 'He's squibbed it’
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 436.
Today in summary: It’s all go for the buy now, pay later industry, with consumer finance group Flexigroup announcing plans to to reclaim ground and Afterpay Touch investing more in the US to speed up already strong growth; the Opposition today announced that its proposed Banking Fairness Fund will commit $120 million over four years to assist with community legal centres; Labor has rebuffed claims that its planned financial compensation scheme could create more problems than answers; the Finance Sector Union of Australia has come out swinging at NAB for axing branch jobs, and ACCC chair Rod Sims sheds some light on the work of the regulator's new banking competition unit.
-- Alex
@AlexESampson
Current banker panic level: 😐😐🤨
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1. It’s all go for the buy now pay later industry, despite last week receiving the news it hoped to avoid from the Economics References Committee report recommendations, including that the sector should, in consultation with regulator ASIC, develop regulation that ensures lending providers “appropriately consider” consumers' personal financial situations before credit is extended. The Australian Financial Review is reporting that investment banker John Wylie has backed a plan for struggling consumer finance group Flexigroup to reclaim ground in the buy-now, pay-later sector as it consolidates its existing offering under a new brand, to be called Humm.
Meanwhile, Afterpay Touch has reported its growth in the US "remains above expectations" and it will invest more to speed up growth. The group expects to have more than one million US customers and 2,000 merchants using the service by the end of March. This comes as shares in Afterpay Touch fell in trading today after its annual report was released, revealing a half-year loss, following a surge of 19.2% on Monday.
2. The Opposition today announced that its proposed Banking Fairness Fund, unveiled yesterday, will commit A$120 million over four years to assist with community legal centres. The money will be used for more lawyers to help consumers bring legal claims for compensation. This will see the financial rights legal assistance sector expanded from 40 lawyers to 240 lawyers across Australia.
Shadow Minister for Financial Services Clare O’Neil said:
What we want Australians to understand is that we get it that if you are in conflict with a banking institution you feel like you have no power. You feel like you are on your own. We are going to try to fix that.
The National Association of Community Legal Centres welcomed the funding commitment saying community legal centres helped hundreds of thousands of everyday people and people experiencing discrimination and disadvantage.
NACLC CEO Nassim Arrage said:
“The recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry Final Report was very clear about the importance of the services community legal centres provide, the difference they make and the need for predictable funding. Additional funding for financial counselling and community legal services is an effective and fair way to ensure people can access help to assert their rights, get out of debt, and protect their livelihoods.”
3. Labor does not believe there is a problem with its planned financial compensation scheme that will revisit old cases settled by courts. At a media conference this afternoon shadow attorney general Mark Dreyfus and Shadow Minister for Financial Services Clare O’Neil responded to concerns about how the scheme would work, including the possibility that a case that’s been ruled on by the Supreme Court could be overturned by a panel that’s appointed by the executive.
Shadow Minister for Financial Services Clare O’Neil said:
“One of the aspects of Labor’s compensation scheme is in the very very worst situations, we are going to try to allow people to have a second chance to have their case heard. Now, there are obviously constitutional issues with re-hearing a court case, and we can’t do that without the consent of the financial service provider.
In instances where we can show a manifest injustice has occurred, and we ask the financial service provider for us to be allowed to have another look at that case, that is the circumstance under which we would consider looking at a previous court action. It is not about going over every court action that’s ever occurred, but in those very small circumstances where a manifest injustice has occurred.”
4. The Finance Sector Union of Australia has come out swinging at NAB, saying Commissioner Hayne was right and that NAB has learned nothing from the banking royal commission. This was in response to yesterday’s news that NAB is cutting 900 staff from customer service roles at branches across Australia. FSU national secretary Julia Angrisano said the staff whose roles were being abolished were those responsible for assisting customers as they walk into a branch.
“It is customer service that is being reduced at the NAB, not staff responsible for sales,” Ms Angrisano said in a statement.
The Australian Financial Review is also reporting that NAB is resisting efforts to make it pay back fees for no service, digging in and clinging to the defence that the fees were "flawed"but not illegal.
5. In a speech outlining the ACCC’s priorities for the year, chair Rod Sims revealed the competition watchdog's financial services competition unit is completing in-depth investigations into banks including its criminal cartel case against ANZ, Citigroup, Deutsche Bank and six senior officers over an ANZ institutional share placement in 2015.
Sims told a CEDA audience in Sydney:
“In commenting on regulators, the Final Report of the Financial Services Royal Commission focussed on issues that were of primary concern to ASIC and APRA. However, an underlying theme of the Royal Commission final report was that competition is not vigorous among the major banks or in some parts of the financial sector.
“We have had a unit that has been focussing on market studies in the financial sector for over a year. We have now established a Financial Services Competition Branch, which includes a permanent competition investigation team that complements the market studies team. This has also been enabled by the MYEFO Budget allocation we received.”
Today’s burn prize: Choice spokeswoman Erin Turner
🔥🔥🔥
“We would not have McDonalds teaching nutrition at our schools and we should not have a bank teaching financial literacy.”
Turner told the Herald Sun that Coburn Primary School’s decision to stop processing deposits by children into their Commonwealth Bank Dollarmites accounts, amid growing concern about the banking sector’s conduct, was a good move.
The Commentariat
ABC investigative reporter Stephen Long argues that Commissioner Hayne held back “heavy hits” from the banks in his recommendations from the royal commission. With the consensus from government, industry and the public that "he's squibbed it".
“In the wash-up of the royal commission, the disconnect between the evidence unearthed in the hearings and the commissioner's mild recommendations for change remains striking.”
The Australian’s business correspondent Richard Gluyas laments the “spawn of populist bidding wars” that has broken out in an attempt to prove something is being done to curb financial sector misconduct.
“In no particular order, the industry has been hit so far with a $6.2 billion levy, the BEAR (banking executive accountability regime) legislation, a royal commission, a massive hike in financial and criminal penalties, a new regulatory mantra of litigate first and ask questions later, and ASIC supervisors embedded in the nation’s top financial institutions. Some of these measures will give the industry a well-deserved shake-up, but the Labor Party entered flaky territory last week with a proposal to set up a second complaints body to provide customers with access to redress for past disputes.”
Australian Financial Review banking and finance columnist Karen Maley writes that NAB's Phil Chronican has once again been caught in the middle of history. Maley discusses the launch of the biography of David Morgan, who ran Westpac from 1999 to 2008, which will be held Westpac's head office in Sydney's CBD on Thursday.
“The launch of the book has stirred up a long-standing rumour in banking circles: that it had been virtually a done deal for Westpac's then chief financial officer, Phil Chronican, to replace Morgan in the top job at the Sydney-based bank. But that all changed as the first tremors of the financial crisis caused the St George share price to weaken relative to that of Westpac.”
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