Day 486: 'Major stuff-up'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 486.
Today in summary: CBA has to repay about 8,000 staff because of poor accounting and IT; ASIC is cracking the whip at bad advice; and Westpac pledges to become one of the first Australian companies to use 100% renewable energy by 2025.
-- Alex
@AlexESampson
Current banker panic level: 🤑👮♀️ 😇
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The Commonwealth Bank has to repay wages and superannuation — with interest — to about 8,000 staff because of poor accounting and IT processes. The bank has notified the Finance Sector Union that it has begun a process of reimbursing current and former staff of CBA and subsidiary BankWest, for a series of avoidable errors that resulted in bank workers being severely underpaid. The FSU estimates the repayments could total A$15 million.
CBA identified the underpayments through its own ongoing review of employee entitlements since 2017. This comes after rumours last week that CBA was planning to axe 10,000 jobs over the the next few years.
ASIC’s bark is finally becoming a bite as it cracks down on bad advice. A former Westpac advice licensee has been banned from providing financial services for five years after he was referred to ASIC's Wealth Management Project. The project focuses on the conduct of Australia’s largest financial advice licensees — the big four plus Macquarie and AMP. Under the project ASIC has banned 54 advisers and one director from the financial services industry.
In this case, Adelaide-based adviser Peter Anthony Chigwidden, who worked for Securitor Financial Group, consistently failed to address the stated needs and objectives of his clients and therefore did not provide advice that was in their best interests.
ASIC this week also banned Perth-based accountant Keith Douglas Bowker from providing any financial services for six years and Queensland-based adviser Gregory Forster for five years, for providing “false information” and “inappropriate advice” respectively. On Monday a former Perth insurance broker was sentenced to two years and nine months imprisonment for dishonest conduct after ASIC pursued the case.
Westpac today announced it would source the equivalent of 100% of its global electricity consumption through renewables by 2025. This comes as financial institutions increasingly come under pressure from lobbyists, politicians and the public to consider the sustainability of their operations and investments. The first phase of Westpac’s transition will be through a power purchase agreement with Bomen Solar Farm, to be constructed in Wagga Wagga, NSW, and expected to be operational by mid next year.
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Today’s burn prize: FSU National Secretary Julia Angrisano
“This is a major stuff-up by the CBA and hard-working bank staff deserve an apology.”
Angrisano was talking about CBA’s admission that avoidable tech errors had resulted in bank workers being severely underpaid.
The Commentariat
Australian Financial Review's Chanticleer columnist Tony Boyd writes that after John Lonsdale led the review into APRA’s inadequate enforcement culture, he deserves to take the box seat when it comes to regulation.
“He took up the position just as the Hayne royal commission was getting into its stride. Almost one year later, Lonsdale is in the box seat to be the man carrying APRA’s big stick. He deserves to be the face of enforcement in superannuation, banking and insurance.”
AFR columnist Karen Maley writes that industry super funds must ignore the siren song of activism. Maley argues that fault lines within the management teams at industry funds will start to show amid growing calls for industry funds to make environmentally sustainable and ethical investments.
“So far, there's been a generally harmonious working relationship between employer and union representatives who are represented in equal numbers on trustee boards. But this is likely to splinter if industry funds become vehicles for pursuing particular social and political agendas.”
The Australian’s business correspondent Richard Gluyas writes that supervisors at APRA face a “difficult transition” from weak cops to tough cops. But Gluyas argues the prudential regulator’s new enforcement plan still puts it “at the milder end” of financial patrol compared with ASIC.
“APRA’s role as a protector of the financial system’s stability and safety demands a different approach.”
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