Day 465: 'Culture of resistance'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 465.
Today in summary: APRA says it will take action on banker pay where bank boards haven’t; ASIC chair James Shipton says it’s a “myth” that responsible lending guidelines are a cause for economic concern; and the Australian Banking Association pushes for quick legislation to ban grandfathered commissions.
-- Charis
Current banker panic level: 😱🤯 😉
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Shareholder returns alone should no longer be driving banker bonuses, says APRA chairman Wayne Byres, warning the regulator will step in to ensure remuneration is based on financial and non-financial considerations. Byers told the AFR Banking & Wealth Summit:
"I think it fair to say that attempts to move away from the conventional model of executive remuneration have not been wholly welcomed.
"Boards have struggled to gain acceptance that new approaches are needed.”
Byres said he was also expecting boards to show more discretion on handing out bonuses, and:
"That will probably also require more transparency about decision making, which is no bad thing."
ASIC chair James Shipton has moved to quell banker arguments that responsible lending guidelines, and the regulator’s moves to prosecute bankers for breaking the law are hurting Australia’s economy.
"I really do want to debunk any myth that somehow these regulations are causing economic concern."
Shipton also told the AFR Banking & Wealth Summit the industry had been slow to make progress in the wake of the Hayne royal commission, and there was resistance to the regulator’s greater willingness to litigate, suggesting there were still things to hide.
“There is a fundamental misunderstanding of our broader fairness mandate and our statutory mandate to enforce the law. It suggests we would use our powers inappropriately, irresponsibly and without foundation to, it has been suggested, unfairly target particular names.
“Most importantly, it suggests there are still things to hide. These sentiments ultimately and unfortunately perpetuate an unhelpful culture of resistance and reluctance.”
Australian Banking Association chief Anna Bligh says those feeling cynical and doubtful that banks can change should remember how much Australia’s banking sector punches above its weight, something impossible to imagine in the 80s when interest rates were still controlled.
Bligh told the AFR’s Banking & Wealth Summit action on Hayne recommendations to end grandfathered commissions in financial advice, a nationally consistent farm debt mediation scheme and changes to ongoing advice fees, should all happen this year.
“Australians should expect that whoever wins the next federal election will have a banking reform bill, with these and other reforms, in the Parliament within their first 100 days of being sworn in. I’d call on both sides to commit to taking this action.”
Today’s burn prize: Prospa CEO Beau Bertoli
🔥🔥🔥
“We don’t hire bankers.”
Bertoli was responding to a suggestion by former NAB banker and Judo Capital founder Joseph Healy that Australia has “a whole generation of bankers who have lost the ability to bank SMEs”.
The Commentariat
Australia’s political and financial systems have become so addicted to short-termism that switching to a different gear seems virtually impossible, writes the The Age’s Adele Ferguson.
She discusses AMP chairman David Murray’s warning that regulators getting too tough might lead to “imprudent outcomes”.
“Murray is thinking about the short term. He fails to mention that the reason the sector got into such a mess was due to poor culture and timid regulators. Self-regulation clearly didn’t work.”
Australia’s slowing economy is giving banks cover to fight back against regulation, writes The Australian’s John Durie.
“What better time for the banks to cry poor and say you are shackling us with so much regulation we are scared to lend.
“Just how effective this lobbying switch will be remains to be seen because the ALP for one is keen to maintain the pressure on the banks.”