Day 493: 'Failed miserably'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 493.
Today in summary: Labor will consider stripping poor performing superannuation funds of their default status, the ASA will vote against against AMP’s remuneration report at the upcoming AGM; and APRA has given fintech Judo Bank a banking licence.
-- Alex
@AlexESampson
Current banker panic level: 😵🆘🤑
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Labor will consider stripping poor-performing superannuation funds of their default status. The Australian is reporting Labor’s financial services spokeswoman Clare O’Neil told industry this week that an incoming Labor government would immediately ask Treasury to come up with ways to kill off underperforming super funds. The measures would reportedly apply to any industry or retail fund that wasn’t up to scratch.
Commissioner Hayne recommended that savings be “stapled” to a worker and did not support the Productivity Commission’s proposed “best in show” list of 10 high-performing funds to inform consumers.
The Australian Shareholders’ Association today announced it will vote against AMP’s remuneration report at the embattled wealth company’s AGM on May 2. ASA cited “insufficient detail” about AMP’s 2019 pay arrangements and an “excessive sign-on benefit” for new chief executive Francesco De Ferrari as reasons for its vote.
In a statement ASA said:
“ASA remains concerned about governance and culture at AMP, as the incentives revealed to date are weighted in favour of driving the share price up.”
The AGM will be closely watched after investors last year voted 61% against AMP’s remuneration report. A second “strike” could lead to a spill of the board. At the 2018 AGM the ASA was the company’s 17th largest shareholder. ASA will vote in favour of David Murray’s re-election and appointment as chairman.
Prudential regulator APRA has given small-to-medium-enterprise lender Judo Bank (formerly Judo Capital) a banking licence. Judo is the second fintech to be granted an unrestricted licence in 2019, following on from Volt, which was given authorised deposit taking institution status on January 19. The authority to operate begins immediately. Judo originally expected to gain approval in December 2018.
🔥🔥🔥
Today’s burn prize: Sydney-based AMP shareholder Louis Joseph
“The silent majority is clearly in favour of recent board and management action in relation to the divestment of the wealth-protection business.”
Joseph and other small shareholders have come out in support of the David Murray-led board's controversial decision to sell AMP’s life insurance arm. This comes amid uncertainty around whether the board’s remuneration report will receive a protest “second strike” vote from shareholders at the upcoming AGM, leading to a spill of the board.
The Commentariat
SMH columnist Elizabeth Knight writes that nervous banks might be shamed into backing the latest financial sector announcement in the Coalition’s “frenzied election campaign”. Knight argues the $1 billion small business fund, announced yesterday, comes on the back of other such funds that have “failed miserably”.
“There is a reason banks will lend a limited amount to small business. They are riskier loans and the banks want to ensure they get their money back. Be it a bank or a super fund, addressing issues like how to get money out or even how to administer the investments, would not be simple.”
SMH/The Age personal finance writer John Collett writes that incoming superannuation changes will save members A$2.6 billion a year. The "Protecting Your Super" package of reforms include a fee cap of 3% on accounts with balances under A$6,000 and the banning of exit fees.
“Most fund members don't take an interest in their super. They open another super fund each time they start a new job, which means multiple sets of account fees and insurance premiums that leave them with less income in retirement.”
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