Day 470: 'Not yet embraced the customer'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 470.
Today in summary: Analysts tip bank remediation costs will add up to A$6 billion next year; Westpac planners aren’t playing nice as the bank seeks to divest from wealth management; and APRA sets out its plan to apply deferred remuneration requirements to smaller banks, regardless of their corporate structure.
-- Charis
Current banker panic level: 😱😡😟
Please don’t keep The Inquisition to yourself. Forward this email to your colleagues and encourage them to sign up for free here.
Analysts at Deutsche Bank say the remediation costs to the major banks of dealing with misconduct could tip over A$6 billion by the end of next year. After NAB chairman Phil Chronican last week defended the bank’s ongoing case with ASIC over the definition of fees for no service, Deutsche Bank analysts Matt Wilson and Anthony Hoo said they were “puzzled” by bank CEOs hiding behind legalese on responsible lending.
“It shows the industry is still grappling with many challenges and have not yet embraced the customer.”
Meanwhile, reports the AFR, JPMorgan analysts expect the cost could shave between 1 and 3% off the full-year net profits of ANZ, CBA and NAB.
Westpac’s plan to sell its financial planning arm to a boutique firm set up by former Westpac financial planners is facing hurdles, reports The Australian. It seems some of the bank’s planners with the biggest customer books are unwilling to join Veridian Advisory.
APRA is consulting on its plan to refine the remuneration requirements under the Banking Executive Accountability Regime (BEAR) for smaller banks.
Under BEAR, banks are required to defer a prescribed minimum proportion of an accountable person’s variable remuneration for a minimum of four years. They must also set out how that remuneration will be reduced if an accountable executive fails to meet their obligations. Under APRA’s proposal if an individual has both an "accountable person" role and another role, the deferred remuneration will only apply to the portion of their variable remuneration relating to the accountable person role.
BEAR comes into force for medium and small financial institutions on July 1, and the deadline for submissions is April 30.
Today’s burn prize: ME Bank
🔥🔥🔥
“The secret project has been in development for 12 months at the ME Institute in response to the growing desire for 'wearables' from Australian banks. The result is an aged, warm fragrance that 100% replicates the distinct scent of cash – no matter how much of the real stuff you have.”
The ME Institute? Only on April 1 thankfully.
The Commentariat
ASIC’s clarification that its post-Hayne mantra is ‘Why not litigate?’, as opposed to ‘litigate first’ is a welcome one, writes The Age’s Stephen Bartholomeusz.
“There are some pragmatic reasons why litigation isn’t the first response to a suspected breach, not the least of which are the costs and risks. The record of regulatory agencies when dealing with actions against large companies is mixed.
“A larger issue is that the law is complex and often quite ill-defined.”
Last week’s Life Code Compliance Committee report into the life insurance sector, along with new data from the regulators, show industry self-regulation is failing, writes Adele Ferguson in the AFR.
“Given the varying state of the systems and the fact that the committee relies on self-reporting by subscribers – and to a smaller extent, customers or their legal representatives – the question is: how much under reporting of complaints and breaches is going on?”