Day 498: 'Disingenuous'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 498.
Today in summary: David Murray scores more support for election as AMP chair; a rebate scheme loophole under draft changes to grandfathered conflicted remuneration has attracted criticism from industry; and the big banks' earnings are under pressure as reporting season kicks off.
-- Alex
@AlexESampson
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.
Embattled AMP chairman David Murray has scored more support for his permanent appointment as chairman of the board. Australian Super — the country’s largest superannuation fund — will vote in favour of Murray at the company's annual general meeting this week. This comes after the Australian Shareholders’ Association last week announced it would vote against AMP’s remuneration report at the wealth company’s AGM on May 2, possibly triggering a “second strike” and spilling the board. But ASA will also vote in favour of David Murray’s re-election and appointment as chairman.
Australian Super has come out swinging in a last minute submission to the Treasury on the draft regulations for Ending Grandfathered Conflicted Remuneration for Financial Advisers, saying the government’s draft laws will only entrench the controversial payments. The group argued “benefits that would otherwise have been paid as conflicted remuneration are rebated to affected clients”.
Treasurer Josh Frydenberg released the draft regulations in February and submissions closed last week. The Australian Institute of Superannuation Trustees has updated its Treasury submission and also rejects the government’s proposal to allow the payment of grandfathered commissions and other conflicted remuneration under rebate schemes.
But the Financial Planning Association of Australia last week made a submission saying it had consistently supported the rebating of commissions to clients as a precondition of phasing out grandfathered commissions on non-risk products. “The task of managing the rebating process should rest with product providers and clients should receive the full dollar amount of a commission as a rebate,” the submission read.
The banking reporting season is due to begin on Wednesday with ANZ’s half-year results, followed by ING, NAB and AMP’s results on Thursday, and Macquarie Group on Friday. AMP will also hold its much awaited AGM on Thursday. ANZ will throw in an update on its royal commission implementation with its results. The AFR is reporting NAB is expected to cut its dividend for the first time in a decade. The big banks' earnings are under pressure as weak revenue trends and rising costs relating to the royal commission, such as customer remediation, have begun impacting bottom lines.
🔥🔥🔥
Today’s burn prize: Australian Super
“Allowing conflicted remuneration to continue in regulations supporting a bill designed to end grandfathered conflicted remuneration is disingenuous and arguably misleading to Parliament and its constituents.”
In a submission to Treasury, Australian Super argues that draft legislation and regulations for ending grandfathered conflicted remuneration will entrench the payments, rather than phase them out.
The Commentariat
AFR senior reporter John Kehoe writes that an RBA rate cut is a matter of when, not if. Kehoe argues that RBA governor Philip Lowe will “almost certainly” cut interest rates in the next few months.
“The big decision for Lowe, a modest character who does not seek the limelight, is whether to insert the RBA into the election fray or publicly set up a rate cut for future months.”
This is an introductory service while we’re building a comprehensive daily paid online publication, coming soon.
We’re not here to offer opinion, simply to cut through the noise, and help you make sense of the emerging policy and market trends you need to be across. We call it pure intel. You can read more about us here.