Day 516: 'Persistent failure'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 516.
Today in summary: NZ bank licenses are only for good banks; the second day of ASIC’s annual forum saw calls for disengaged super members to wise up; and changes to strengthen South Australia's lobbying laws would prohibit parliamentary employees and volunteers from lobbying on matters outside their work.
-- Alex
@AlexESampson
Current banker panic level: 😱🤓🤫
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ANZ shares dropped almost 3% (to A$25.90) today after the Reserve Bank of New Zealand made a shock announcement that it was revoking the bank’s licence to model and operate its own capital levels, calling out a “persistent failure” in its controls. The NZ central bank had discovered ANZ had been running an unapproved model for almost five years. ANZ will now have to up its minimum capital held for operational risk by about 60% (an extra NZ$277 million/A$163m).
The Australian | AFR | ABC
Meanwhile, ANZ today announced it will no longer offer its Prime Access financial advice service — an annual review-based paid financial advice service — to new customers and will phase it out for current customers over the next 18 months. The fees-for-no-service program was last year hit with an ASIC enforceable undertaking and had to repay A$3 million to more than 10,000 customers. Instead, the bank will charge for advice on a case-by-case basis, and customers will also be given the choice of how frequently they want a review of their financial plan.
The Australian | AFR | SMH
The second day of ASIC’s annual forum in Sydney saw calls for disengaged super members to revisit their retirement savings. AustralianSuper chief executive Ian Silk says some members had lost six-figure sums because they moved their money into cash after the GFC and hadn’t moved it again. The super company is also rethinking its advice to members to improve savings.
ASIC chair James Shipton told the forum that regulators were not to blame for tighter lending conditions. Deputy chair Daniel Crennan said all businesses should be aware of a “societal shift” in public expectations around misconduct.
Measures to strengthen South Australia's lobbying laws have been introduced to state parliament. The proposed legislation would prohibit office bearers, employees and volunteers of parliamentary parties and “associated entities” of parliamentary parties from lobbying on matters outside their ordinary work.
🔥🔥🔥
Today’s burn prize: RBNZ deputy governor Geoff Bascand
“Accreditation is earned.”
Bascand condemned ANZ's New Zealand bank for failing to adequately assess its own capital requirements. He said banks needed to earn their licenses through “maintaining high risk management standards” which came with “stringent responsibilities for the bank's directors and management”.
“ANZ's directors have attested to compliance despite the approved model not being used since 2014,” Bascand said.
The Commentariat
ASIC hopes for a clear winner in the federal election, writes senior business commentator John Durie in The Australian. Durie argues the worst outcome for business from tomorrow’s election would be minority government that was unable to govern decisively and points to ASIC having “a slew of legislation waiting in the wings” that needs addressing.
“Fortunately, the old parliament managed some changes, including the addition of civil penalties to the ASIC armoury.”
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