Day 466: 'Careful not to know'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 466.
Today in summary: Treasury releases exposure draft of legislation that would see financial advice clients reimbursed on grandfathered commissions; Frydenberg pushes ahead with Hayne recommendation on MySuper insurance inclusions; and ANZ is still worried about the privacy implications and ‘known unknowns’ of open banking.
-- Charis
Current banker panic level: 🤕🤐🤔
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Treasury has nudged along the slow process to abolish grandfathered commissions, with an exposure draft detailing legislation for contractually obligated banks to pay the commissions to clients instead of advisers. The Association of Independently Owned Financial Professionals has been considering a High Court challenge to the government’s plan to abolish all grandfathered commissions by 2021, but it’s on shaky ground. Labor has promised to end the commissions a year earlier, from January 2020.
The exposure draft says the fees should be refunded in cash where the conflicted remuneration can be attributed to a particular client, or if tracked only to a client group, divided between clients “in a just and equitable way” either via cash or in the form of a fee reduction.
Treasurer Josh Frydenberg has embraced Commissioner Hayne’s recommendation that insurance linked to MySuper accounts have universal key terms, definitions and exclusions. Frydenberg said:
“The Government is focused on putting the interests of superannuation members – not superannuation funds – first. We have already introduced legislation into the Parliament to protect Australians from paying premiums for insurance they don’t want, need or even know they have.”
Treasury has released a consultation paper on the issue and is calling for submissions by April 19.
A pilot of open banking is due to kick off in July this year, assuming the government has any time before it calls the election to pass the Consumer Data Right Bill. In the meantime, the banks continue to complain of privacy concerns, throwing shade on an initiative the government says will boost competition.
Yesterday, ANZ chief data officer Emma Gray told the AFR Banking & Wealth summit the bank was concerned about consumer privacy, and the information it may expose, such as doctor visits. She said and while the bank was respectful of that, others may not be.
“The banks know lots about our customers, but because of the things we know, we are careful to not know those things.”
Today’s burn prize: NAB chairman Phil Chronican
🔥🔥🔥
“The court ordered a mediation, and they're a model litigant.”
Chronican was responding to a question from Labor MP Matt Thistlethwaite as to why ASIC agreed to mediation and didn’t just prosecute the bank on the fees for no service case it is fighting.
The Commentariat
“Pockets of resistance” to Commissioner Hayne’s recommendations are coming too soon, just 50 days after the final report was released, writes the Sydney Morning Herald’s Elizabeth Knight.
“Banks differ a bit on their accounts of why there is credit crunch. But to the extent that it is a consequence of the royal commission there will be little sympathy for the banks - who will be seen as bringing it on themselves.”