Day 457: 'Ditch wealth altogether'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 457.
Today in summary: Westpac is selling off its wealth division; governance experts warn criminal acts exposed during the banking royal commission may never make it to court; the Coalition has announced it will develop a National Blockchain Roadmap; and APRA chairman Wayne Byres wants the government to pass stalled legislation allowing it to crack down on superannuation funds failing to act in members’ interests.
-- Alex
@AlexESampson
Current banker panic level: 🤑 😲 😎 🤷🏻♂️
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1. Westpac is selling selling off some of its wealth division BT Financial Group and restructuring the rest. It is the last of the big four banks to make moves to divest any of its vertically integrated subsidiaries. The bank today unveiled a sweeping restructure which would see many of its financial planners moved to boutique firm Viridian Advisory, amounting to a cut of about 900 full-time jobs at the bank. Two top executives will leave, including BT boss Brad Cooper. An ASX statement released today revealed the bank was moving to a “referral model” for financial advice and would exit the high-cost, loss-making wealth business, creating savings of A$280 million by 2020.
2. The ABC is reporting that governance experts warn criminal acts exposed at the banking royal commission may never make it to court with regulators unable to prosecute each of the 24 referrals made by the inquiry. The ABC pointed to the billion-dollar collapse of Storm Financial, which began with actions in 2007, was prosecuted in court in 2010 and reached a judgement in 2016.
Swinburne University law and corporate governance specialist Helen Bird said:
“So you sit back and look at that and think well, what does that tell you about how long this is going to involve, and it's a message not to be too idealistic about the times.”
3. Australia’s readiness for the rise of blockchain technologies and ways to regulate them were the hot topics at the ADC Global Blockchain Summit in Adelaide today. Minister for Industry, Science and Technology Karen Andrews said there were abundant potential applications of blockchain in Australia. Andrews took the opportunity to announce the government would be developing a National Blockchain Roadmap, which would examine the potential uses and benefits of blockchain for Australia, and look at how the country could become a global leader.
The government will be providing A$100,000 to support Australian blockchain companies to join Austrade’s mission to the landmark Consensus blockchain event in New York from May 12 to 16 this year — a key event for the industry — allowing Australian blockchain companies to explore global opportunities. The summit continues tomorrow.
4. APRA chairman Wayne Byres has called on the government to pass stalled legislation that would give the prudential regulator the power to intervene if superannuation funds fail to act in members’ interests. Mr Byres said APRA “expects trustees will meet responsibilities free from the influence of other external parties”.
Today’s burn prize: Shadow Assistant Treasurer Andrew Leigh
🔥🔥🔥
“Just as you wouldn't expect me to defend all politicians (this week of all weeks), I'm sure none of you would want to defend every single mortgage broker in Australia.”
While making a speech at the Australian Finance Group’s “Future of Mortgage Lending in Australia” talk in Canberra today, Leigh reminded the sector that while the vast majority of mortgage brokers delivered their services with distinction and professionalism, the banking royal commission did highlight examples in which mortgage brokers weren't acting in the best interests of their clients.
The Commentariat
The Australian’s business correspondent Richard Gluyas writes that Westpac will lead an advice exodus among banks scrambling to divest.
“The irony is that chief executive Brian Hartzer wants to keep his wealth business, in contrast to delayed or failed attempts by his rivals not only to get out of advice but to ditch wealth altogether.”
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