Day 439: 'It starts and stops with us’
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 439.
Today in summary: Yellow Brick Road shares suspended as the troubled mortgage broker fails to file its results in time; the government has released a consultation paper on reforms for insurance claims handling; ASIC has released its latest report on licensing and professional registrations, revealing heavy rejection rates; and NAB interim chief says royal commission was right.
-- Alex
@AlexESampson
Current banker panic level: 😩😱
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1. Troubled mortgage broker Yellow Brick Road has blamed “recent events” including the Hayne royal commission for delaying the release of its first-half results and flagging an impairment. This is despite Chairman Mark Bouris telling shareholders in November the group was "well placed to succeed, whatever the outcome of the royal commission”. The Sydney Morning Herald is reporting the company has written off the goodwill in the wealth management businesses it owns, as a result of the royal commission's final report. Trading in its shares has now been suspended by the ASX.
2. The government has released a consultation paper on reforms to insurance claims handling. The proposed changes would re-class claims investigators, call centre staff, contractors and superannuation trustees as providers of financial services. The government’s consultation paper, released today, suggests stopping insurance claims handling from being exempt from the definition of ‘financial service’ under the Corporations Act, bringing them under tighter regulation, as recommended by Commissioner Hayne. The deadline for submissions is March 29.
3. ASIC has released its latest report on licensing and professional registrations, revealing it rejected more than half (62 %) of the 2,879 applications considered in the 12 months to June 2018.
Of the 2,879 total applications, 48% (1,383) related to Australian Financial Services License applications and 29% were ASIC Credit License applications. The remaining 11% were professional auditor registrations. During 2017-18, 12 AFS licences and 12 credit licenses were suspended and about 15% of the 191 AFS licences and 319 credit licences were cancelled at the initiation of ASIC.
ASIC assessment and intelligence executive director Warren Day said:
“We encourage prospective applicants, and licensees intending to apply for variations, to review this report to better inform their applications and understand the regulatory context when applying.”
4. Acting NAB chief executive Phil Chronican has shown humility where his predecessor demonstrated hubris and lack of accountability, admitting on his first day in the job that the royal commissions was “right”. In a note sent to NAB’s top 100 leaders last night Chronican signalled a marked change in tone at the bank.
“There is a big gap between where we are today, and where our customers, shareholders and the community expect us to be. I am focused on making sure we compensate customers as quickly as possible; and on fixing the issues that caused the failure. We need to bring the same obsession to customer outcomes that airline companies do to safety. We must deliver an exceptional experience, ensure our products and services provide fair value, and be uncompromising on accountability, quality and standards.”
Today’s burn prize: NAB acting CEO Phil Chronican
🔥🔥🔥
“We need to own this. It starts and stops with us.”
Chronican displayed humility previously missing from the bank’s response to the banking royal commission in a call last night with the bank's top 500 leaders. He also told the group: “we are the bank's most senior leaders: we need to run the bank – and we need to change it”.
The Commentariat
The Australian’s senior banking reporter Joyce Moullakis writes that the cartel action against ANZ will be the most closely watched test case in recent history. Some of Moullakis’s sources believe the matter won’t properly get underway in court until mid-2020. ANZ is one of three banks to receive charges relating to a 2015 capital raising, with Deutsche Bank and Citigroup, and six individual bankers, also accused.
“It’s been a long gestation time for those whose careers are treading water or on hold after the competition regulator spectacularly lodged the action more than eight months ago. Listed companies and their lawyers will also be closely watching as they err on the side of extreme caution on disclosure of any negotiations between investment banks if there are shares left over in capital raisings.”
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