Day 492: 'Change is afoot'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 492.
Today in summary: The Finance Sector Union has taken CBA to Fair Work over rumoured staff layoffs; the Morrison Government will partner with financial institutions to provide support funding to small and family businesses; stricter efforts to meet responsible lending requirements following the banking royal commission have slowed the market; and changes to AFCA’s remit could put financial planners out of business.
-- Alex
@AlexESampson
Current banker panic level: ☹️🤑🤕🐢
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The Finance Sector Union has taken concerns about Commonwealth Bank staff layoffs to the Fair Work Commission. The FSU wants the bank to confirm whether reports in The Australian’s Margin Call column this month that the bank would axe 10,000 jobs in the near future are accurate. The FSU said CBA employees had the right to be consulted about possible major changes.
FSU national secretary Julia Angrisano said:
“We have seen a few statements from the bank which suggest to us that change is afoot but bank workers need to be considered at the beginning of the process and not just once the big decisions have already been made.”
The Government has announced it will partner with financial institutions to provide equity funding to small and family businesses. The Morrison Government, if elected, will establish a A$100 million Australian Business Growth Fund to help small and family businesses to grow. The AFR is reporting ANZ and Westpac have baulked at joining the fund.
Over time the fund is expected to grow to A$1 billion and support 30-50 businesses a year with annual turnovers between $2 million and $50 million. The Government said the fund would complement the A$2 billion Australian Business Securitisation Fund, which comes into effect on July 1, and will provide more funding for smaller banks and non-bank lenders to lend to small and family businesses.
SMH | The Australian | AFR
Strict interpretation of lending requirements following the banking royal commission has created a “bottleneck of mortgage applications”, pushing up the cost of credit and reducing borrowing capacity, the AFR is reporting. The report refers to new data from online mortgage broker Lendi based on an analysis of more than 30,000 of its mortgages.
Lendi managing director and co-founder David Hyman said:
“It means the market slows down. All lenders and brokers are requiring more resources in order to get each submission through to settlement and customers are having to wait.”
Meanwhile NAB has announced it will crack down on new lending, probing into borrowers’ total debt ranging from tax bills to family loans, overdrafts and lines of credit.
The Financial Planning Association of Australia today voiced concerns about the Australian Financial Complaints Authority’s proposed changes to its legacy complaints rule, saying they will lead to a spike in the cost of professional indemnity insurance and may even put some planners out of business permanently. The changes expand AFCA's remit and give it temporary powers to revisit cases from 10 years ago for a one-year period beginning July 1 this year.
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Today’s burn prize: Mortgage Success founder Katrina Rowlands
“It seems like the assessors feel they are not doing their job unless they come back to you with more questions.”
Rowlands said all brokers were feeling the pinch as assessors tried to be more stringent about meeting their lending requirements following the Hayne royal commission.
The Commentariat
The Australian’s business correspondent Richard Gluyas writes that it is time to bury the banking hatchet. He argues it does not makes sense to “maintain the rage” when growth is slowing, with banks holding out hope that opposition treasury spokesman Chris Bowen is “a policy grown-up”.
“Kicked from pillar to post for years, they’re either a direct target for Labor or a convenient distraction when the Morrison government goes all in on border protection.”
SMH columnist Elizabeth Knight writes that after a rough year there's little sign of a clean up on the horizon for the big banks. Knight believes that no key issues from the banking royal commission will be definitively addressed when ANZ, NAB and Westpac release their first half results over the next couple of weeks, but argues shareholders will receive a taste of the difficult banking environment.
“There has been lots of whispers coming from the industry that the National Australia Bank could be the first of the majors to cut the dividend. This is in large part because it has just installed a new, albeit interim, chief executive in Phil Chronican who is undertaking a major spring clean.”
SMH columnist Stephen Bartholomeusz writes that the day of reckoning looms for David Murray and the AMP board. Now less than two weeks from the embattled wealthy company’s AGM — which will seal the fate of Murray and his board — speculation is ramping up about the level of support Murray can garner.
“With the main proxy advisers recommending the remuneration report be approved and the prospect of, if not chaos, significantly instability if it weren’t, the most likely outcome is that the report will be endorsed.”
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