Day 484: 'Don’t defend the indefensible'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 484.
Today in summary: Freedom Insurance Group is selling its policy administration business after it was torched during royal commission hearings; ANZ will formalise a set of 15 dispute resolution principles; Citigroup will refund more than A$3 million to 114 retail customers for losses following an ASIC case; and General Motors' lending business is re-entering Australia despite a tightening regulatory environment.
-- Alex
@AlexESampson
Current banker panic level: 👻😇🤕🤑
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Freedom Insurance Group is selling its policy administration business to an undisclosed firm for A$5 million. The embattled insurance business says it plans to exit all of its operating businesses after the deal has gone through. The banking royal commission accused the company of questionable direct-sales tactics after the commission heard a case of the company pressure selling funeral, accidental death and accidental injury insurance to a 26-year-old man with Down syndrome. Freedom today announced it would leave its Spectrum Wealth Management business after the sale.
SMH | The Australian | ABC | SBS
ANZ today announced it would formalise a set of dispute resolution principles to ensure customer complaints and legal matters were handled fairly and in line with community expectations. The new principles provide a template for ANZ’s staff members and external lawyers involved in any disputes, complaints or legal matters. The 15 general rules — which do not cover class actions or other legal cases involving groups — include principles such as don’t defend the indefensible, be even handed, take quick action, assess ANZ’s position early and only litigate where there is no reasonable alternative.
ASIC is investigating 90 cases of potential wrongdoing in the wealth management arms of major banks and financial institutions, up from 45 in September 2018. The Australian Financial Review is reporting that 76 of those investigations have involved the regulator using its powers to force companies to produce information.
ASIC executive director of financial services enforcement Tim Mullaly said 14 of the 90 matters were at the litigation stage. ASIC's Wealth Management Project focuses on the financial advice arms of CBA, ANZ, NAB, Westpac, Macquarie and AMP.
In other ASIC news American multinational investment bank and financial services corporation Citigroup will refund more than A$3 million to 114 retail customers for losses arising out of structured product investments offered by Citigroup between 2013 and 2017.
Citigroup will also write to more than 1000 customers remaining in the products to provide them an opportunity to exit early without cost. The remediation comes after ASIC investigated Citigroup’s sale and provision of general advice to customers, which the corporate regulator alleged led some customers to believe that Citigroup was providing personal advice.
Meanwhile, a former Perth Insurance Broker has been sentenced to two years and nine months imprisonment for dishonest conduct following an ASIC case.
General Motors' lending business is re-entering Australia after the banking royal commission exposed the car loan industry’s poor practices toward customers. GM Financial (GMF), owned by the US car-making giant, wants to offer car loans via Holden dealers, despite the loans industry facing widespread regulatory change. The Sydney Morning Herald is reporting that GMF ultimately wants to finance half of the cars sold through Holden's dealership network. The Hayne royal commission recommended car dealers no longer be exempted from consumer credit protection laws.
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Today’s burn prize: MyWave chief executive Geraldine McBride
“I don't think I've ever allowed myself to be diminished.”
McBride told the Australian Financial Review that throughout her career in banking and finance one of her biggest challenges had been coming up against men who tried to diminish what women could do or who had underestimated her.
The Commentariat
Adele Ferguson, who last week delivered the AN Smith Lecture in Journalism at University of Melbourne on the relationship between the big banks and the media, writes in the AFR that political parties split on implementing Hayne recommendations.
“At the end of the day, if there is a contest between Labor and the Coalition on financial reforms, it is obvious who is in front. But when it comes to some of the big ticket structural issues such as vertical integration, super, remuneration or the regulators, both parties have adopted Hayne’s approach, which was to ignore them in the hope they would sort themselves out. Here’s hoping.”
Copenhagen Consensus Center director Dr Bjorn Lomborg writes that the poor can’y count on the World Bank. He points to criticism calling new World Bank president David Malpass “an arsonist in charge of a fire department”.
“Should we help the poor by cutting carbon dioxide emissions now and reducing temperatures a bit in 100 years’ time, or instead focus immediately on malaria and education? The evidence clearly shows that direct policies are much more effective.”
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