Day 529: 'It's a disgrace'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 529.
Today in summary: AMP faces another class action; Bendigo Bank's veteran chairman Robert Johanson is stepping down; and AFCA will develop a framework for assessing fairness by the end of this year.
-- 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.
AMP faces another class action. Maurice Blackburn Lawyers today filed the first class action seeking compensation for AMP superannuation fund members allegedly hit with “unreasonable” fees. This is the law firm’s second class action against AMP after teaming up with Slater & Gordon to represent AMP shareholders over the wealth manager's involvement in the fees-for-no-service scandal.
Maurice Blackburn is already in the process of other banking class actions, including one against Westpac over responsible lending laws and UBS, Barclays, Citibank, JPMorgan and Royal Bank of Scotland subsidiary NatWest for cartel behaviour to manipulate foreign exchange rates. Rival firm Quinn Emanuel has launched a class action against embattled wealth company IOOF.
ABC | The Australian | The New Daily | AFR
The banking executive exodus continues as Bendigo Bank's veteran chairman Robert Johanson is stepping down after 13 years as chair, and 31 at the regional bank. Johanson has announced he will retire from the bank after the 2019 AGM, to be replaced by former Ericsson boss Jacqueline Hey. During that time Johanson oversaw the merger of Bendigo Bank and Adelaide Bank, the bank’s management of the GFC and the banking royal commission.
Meanwhile, Swinburne University of Technology has joined forces with Bendigo Bank to establish the first-ever FinTech postgraduate degree. Swinburne has built on its ongoing partnership with Bendigo Bank to develop and deliver an Australian-first co-designed and co-delivered Master of Financial Technologies (FinTech).
AFCA has the capacity to be a “real game changer” in the architecture of dispute resolution, chair Helen Coonan told delegates at a CEDA luncheon today, discussing priorities for the financial complaints body. Coonan said the body would be part of what it’s calling the ‘Fairness Revolution’. AFCA will aim to produce a set of criteria for fairness which can be plainly understood. The framework will be delivered by the end of this year. Going forward, Coonan said AFCA would play a key role in helping its members “improve practices, raise standards and embed a new customer focused culture”.
Coonan said:
“We will raise awareness and deliver education to members and the community to help reduce these issues from cropping up in the first place. We have scale, scope and plenty of resolve.”
AFCA has received more than 40,000 complaints — about 5,900 a month — after seventh months of operation, and has awarded A$83 million in compensation. Ultimately, AFCA wants to avoid disputes by raising standards and improving practices in the banking and finance sector.
🔥🔥🔥
Today’s burn prize: Maurice Blackburn principal lawyer Brooke Dellavedova
“It’s important that inquiries and regulators uncover mass wrongdoing of this nature, but that doesn’t give people back their hard-earned superannuation funds, which they need for their retirement.”
Dellavedova estimates that more than two million accounts have been impacted by AMP’s alleged misconduct in relation to charging “unreasonable” fees on super accounts. She’s taking them to court, supported by litigation funder Harbour.
The Commentariat
Half of all Indigenous people experience high levels of financial stress, writes Jessica Irvine in the SMH.
“Our nation’s first people struggle disproportionately to pay bills and are more frequent users of high-cost credit sources such as payday lenders. It's a disgrace. And we should do so much better.”
New Zealand banks are fighting back over the central bank’s proposed capital reforms, writes business correspondent Richard Gluyas in The Australian, with the banks arguing the proposed insurance policy is prohibitive.
“The key problem is that the banks have completely lost confidence in the process put in place by the RBNZ. The trigger for the industry’s loss of confidence was the RBNZ’s failure to complete a cost-benefit analysis before it released its ambitious proposal late last year.”
Savings for deposits hard and compulsory superannuation makes it harder, writes Centre for Independent Studies research director Simon Cowan in The Australian.
“The retirement system forces young workers to prioritise superannuation above homeownership. Yet for many — especially those who are consequently unable to ever get into the property market — this may not be in their best interests. Increasing compulsory super isn’t just bad housing policy, it’s also bad retirement policy.”
Taking the cash rate down from its already historically low level of 1.5% comes with risks, writes UTS Business School industry professor Warren Hogan in AFR.
“In the post-crisis global financial landscape, the costs of easy monetary policy are much more widespread and complex than just higher consumer price inflation. These costs include excessive leverage, growing inequality and an inefficient allocation of credit.”
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.