Day 526: 'A new era'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 526.
Today in summary: Maurice Blackburn to bring a class action against five investment banks for alleged rate manipulation; compliance boffins are the only ones in financial services getting pay rises; Suncorp’s CEO Michael Cameron has not survived a period of immense change at the bank; and thousands of financial advisors could ditch the profession.
-- Alex
@AlexESampson
Current banker panic level: 😰🤮🤕😤
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The class actions against banks have hit the investment banking sector. Law firm Maurice Blackburn, which has class actions against AMP and Westpac underway, is now targeting UBS, Barclays, Citibank, JPMorgan and Royal Bank of Scotland subsidiary NatWest, for cartel behaviour to manipulate foreign exchange rates.
MB will allege the banks colluded on foreign exchange rates by using chat rooms. The banks have already admitted similar behaviour to regulators in the UK, Europe and the US. The competition regulator ACCC has a general cartel investigation underway.
Compliance experts are the only ones in financial services getting pay rises at the moment, according to a survey of more than 3,400 companies. The survey also revealed financial institutions are capping pay as they grapple to reduce costs amid poor performance and rising compliance costs that have dogged the industry after the Hayne royal commission. Recruitment firm Hays, which conducted the survey, said two-thirds of employers intended to increase salaries by 3% or less.
Suncorp’s chief executive Michael Cameron has not survived a period of immense change at the bank. After overseeing a move toward more efficient technology systems, major regulatory change and an increased focus on customers following the banking royal commission, lukewarm financial performance got the better of shareholders, who wanted him gone.
Reports of disagreements with board members about whether to divest the financial group’s banking operations and focus on insurance reveal even deeper problems. Getting bogged down while paying out insurance on storms can’t have helped either. Chief financial officer Steve Johnston will serve as acting chief executive.
SMH | The Australian | AFR
Thousands (up to 40%) of financial advisers could leave the industry due to new rules and increased professional standards. Many of the rest are likely to move from bank-owned firms to non-aligned businesses, such as accounting firms, as banks move away from vertical integration. A new research white paper from advice firm CountPlus has forecast the accounting and financial advice sectors will rapidly converge, which would inevitably lead to increases in up-front costs for consumers.
Also putting advisers off are changes to education and ethical standards, under a new FASEA regime, which will require new and existing advisers to meet a minimum compulsory education level and pass an exam.
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Today’s burn prize: Maurice Blackburn managing director Greg Wisbey
“Australian businesses shouldn’t pay more because the banks got together to work out how to make more profits for themselves. It’s hard to take individual action against this kind of price rigging because the price increases are small, but when repeated over thousands of transactions they make a real difference to currency prices.”
The law firm today announced it was bringing a class action against investment banks UBS, Barclays, Citibank, JPMorgan and Royal Bank of Scotland subsidiary NatWest, for cartel behaviour in colluding on foreign exchange rates.
The Commentariat
Modern monetary theory demands new boundaries for the central bank, writes general manager for research and product innovation at Queensland Investment Corporation Katrina King in the AFR.
“This is a new era where all theories on how economies work are being questioned. The financial community — investors and consumers, inflation sceptics and neo-classical economists — may have to keep an open mind.”
Senator Jane Hume is set to “regulate her old employer”, according to AFR columnist Myriam Robin, following her work as a senior policy adviser at AustralianSuper before she entered politics.
“Industry superannuation's growing clout makes many Liberals very uncomfortable, which was why some were decidedly sceptical on Hume's elevation back in 2016. Presumably she's earned their trust by now...”
Michael Cameron knew his fate as Suncorp chief executive was sealed in September last year, The Australian’s business correspondent Richard Gluyas writes.
“Cameron had been in the job for three years, the market hadn’t warmed to his marketplace strategy, the business was underperforming, and Ziggy Switkowski was handing over to a new chair, Christine McLoughlin, in the middle of a royal commission.”
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