Day 528: 'Undeniably controversial'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 528.
Today in summary: Patrick Allaway will replace Roger Davis as Bank of Queensland chairman; new research shows 75% of Aboriginal and Torres Strait Islander Australians have had trouble accessing financial services; and a new report claims home ownership is likely more important than accumulating superannuation.
-- Alex
@AlexESampson
Current banker panic level: 😅🤑🏠
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Patrick Allaway will replace Roger Davis as Bank of Queensland chairman. Davis, who became chairman in May 2013, will leave the board in October after the bank releases its full-year results. Allaway is a finance industry veteran and also serves as a non-executive director of Nine Entertainment Co and Domain Limited. The bank, like NAB, is also searching for a new boss after former CEO Jon Sutton resigned in December.
The bank announced underwhelming half-year results last month after a period of “enormous regulatory, technological and economic change” and blamed manual checking of customers' living expenses for weak loan growth. At the time BOQ said it was exploring a range of technologies to automate its mortgage origination process, including robotics, process automation, digital acceptance and automated workflows.
The Australian | AFR | SBS
Aboriginal and Torres Strait Islander Australians experience disproportionate financial disadvantage, according to a report released today by the First Nations Foundation, NAB and the Centre for Social Impact. Half the people surveyed for the report were experiencing severe or high financial stress, compared to 11% of the broader Australian population, and 23% had used credit from a high-cost lender such as a payday loan or pawn broker. This comes after the Senate Economics References Committee in February released a report on credit and financial services targeted at Australians at risk of financial hardship, which found “bullying and invasive practices” were being used by lenders targeting Indigenous communities.
The report also showed 75% of Indigenous people had trouble accessing financial services and only 1 in 10 was financially secure. When it came to getting access to emergency funds, 41% of people had borrowed credit from a bank or Centrelink in the past 12 months, 11% of people said they had needed credit but couldn’t get it. Access to credit was hampered by not knowing enough about the services available, shame, trust, cost and long waits for approval.
It is likely home ownership is more important than accumulating superannuation, according to a report from the Centre for Independent Studies, released yesterday. The report points to the fact that as house prices have increased, it has become much harder to save for a deposit and homeownership among younger workers has fallen. The right-leaning think tank argued that superannuation, particularly the proposed future increases in the guarantee rate from 9.5% to 12%, was one of the reasons it was harder to save for a deposit.
The report says:
“Not only is the Age Pension an existing solution to this problem, one that is not eliminated by superannuation, but there are often good reasons for lower income workers to prioritise consumption over savings, or different savings goals over retirement.”
🔥🔥🔥
Today’s burn prize: AFR Chanticleer columnist Tony Boyd
“The company appears to think the bank could not handle the cultural upheaval caused by replacing its CEO and chairman at the same time.”
“This is rubbish.”
AFR Chanticleer columnist Tony Boyd isn’t impressed by Bank of Queensland’s decision to leave outgoing “lame duck” chairman Roger Davis in place until October.
The Commentariat
New capital requirements proposed by RBNZ are the tip of the governance iceberg, writes Roger Partridge in the AFR, chairman of the New Zealand Initiative and former chairman of Bell Gully, one of New Zealand's largest law firms.
“The proposals are undeniably controversial. They set a risk appetite for reducing the frequency of bank failure to once every 200 years. Remarkably, this figure is unsupported by a rigorous cost-benefit analysis from the central bank.”
Award-winning UniSuper provides sustainable returns by avoiding “highly leveraged, complex structures” such as hedge funds, instead backing infrastructure such as toll roads, explains personal finance writer John Collett in the SMH. He explains risk management looms large for chief investment officer John Pearce and his team.
“The aim is not to be first over shorter periods of time, but to have returns that are sustainable, which is the best way to maximise returns for members over the long term.”
Industry funds have won the argument over the retail superannuation sector, writes senior columnist John Durie in The Australian, after the latest APRA super figures revealed the outperformance of retail funds by the industry funds. This comes amid news Treasurer Josh Frydenberg will hold a review of the retirement system.
“Just who conducts the review, and on what terms, will be the key policy test but there are some questions worth asking, like whether the tax benefits are actually paying for themselves in terms of savings and lower pension payments.”
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