Day 533: 'It’s no secret'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 533.
Today in summary: ANZ has completed the sale of its life insurance arm to Swiss insurance company Zurich; the life insurance industry will launch a campaign for advisers to keep their commissions; APRA warns new changes to actuarial practices for general, life and private health insurers next month must extend to non-financial risks; an ATO whistleblower says the stress of speaking out nearly killed him; and Labor has announced its finance shadow ministry.
-- Alex
@AlexESampson
Current banker panic level: 🙋♂️😡🤑🤑
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ANZ has completed the sale of its life insurance arm to Swiss insurance company Zurich. The completion of the sale marks the start of a 20-year agreement for Zurich to provide life insurance products to relevant ANZ customers through the bank’s channels. From today, more than 500 former ANZ staff members have joined Zurich as part of the transaction.
Former Labor minister Bernie Ripoll will lead a campaign to convince policymakers to allow life insurance advisers to keep their commissions. Insurer AIA will run advertisements warning that changes to superannuation laws next month, including ending some commissions, exit fees and default cover, will leave some workers without cover.
A precedent was set when a similar campaign run by the Mortgage & Finance Association of Australia, called “Don’t Kill Competition”, was earlier this year successful in reducing cuts to mortgage broker commissions. It saw the government back down from the banking royal commission's recommendation that all commissions in the mortgage broking industry be abolished. Meanwhile, Suncorp’s superannuation division has today had a class action brought against it for conflicted banned commissions paid to financial advisers.
The influence of new APRA changes to actuarial practices for general, life and private health insurers next month “cannot be confined to traditional financial risks, given the substantial damage to prudential soundness that can arise from the poor management of non-financial risks”, according to deputy chair John Lonsdale. In a speech to the 2019 Actuaries Summit in Sydney this morning, Lonsdale said non-financial risks, left unaddressed, would have “distinctly financial” consequences.
“In the wake of the Royal Commission, our major banks have seen their profits eroded significantly by the cost of remediating aggrieved customers and upgrading or putting in place systems to stop it happening again.”
Lonsdale cautioned that in the current climate it only took one media exposé or social media outcry to cause a company serious financial damage, often in the space of days or hours.
An ATO whistleblower, who is facing 161 years in jail for his disclosures against the tax office, has broken his silence on the personal impact of his whistleblowing, saying he felt as though he’d “almost died” from the stress it brought on him. Richard Boyle, who made disclosures under the provisions of the Public Interest Disclosure Act 2013, told ABC 7.30 he lost his job, broke down, had chronic insomnia and had a series of stress-related heart issues.
Centre Alliance Senator Rex Patrick is calling on the government to intervene.
“There's a very strong message that's being sent to people inside the ATO — if you blow the whistle, you're history.”
This comes as new whistleblower protections are due to come into effect on July 1, including changes to the definition of victimisation which has been expanded to cover more forms of reprisal.
Labor yesterday announced its fresh shadow ministry, appointing Dr Jim Chalmers MP as Shadow Treasurer, Senator Katy Gallagher as Shadow Minister for Finance. Matt Thistlethwaite has been reappointed as Shadow Assistant Minister for Financial Services.
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Today’s burn prize: PwC Australia chief executive Luke Sayers
“I’m a big believer that the world does not start and finish with the CEO. If you’re just on the treadmill working 18 hours a day, you’re going to miss those breakthrough ideas.”
Sayers told the SMH he would “absolutely” take long-service leave as CEO, in relation to a story about whether it is appropriate for high level finance executives to take time off. Sayers was backed by co-founder of venture capital fund AirTree Ventures, Daniel Petre, who said if a company couldn’t survive without its CEO for five to seven weeks, then there was “something fundamentally wrong with that company”.
The Commentariat
There are few industries facing as many “apocalyptic” events as the country’s 24,000-plus financial advisers, writes Adele Ferguson in the AFR.
“There are also few industries grappling with as many trust issues after being at the centre of a string of financial scandals over the past decade, which has prompted a clean-up.”
Qantas, Woodside and the AFL Commission chair Richard Goyder questions the independence of industry super fund boards, writes Sky News Business journalist Ticky Fullerton in The Australian.
“It’s no secret that many in corporate Australia remain sceptical of the role of these union-backed funds, with major stakes in listed companies. Their indisputable track record of returns and low-fee reputation have lured hundreds of millions of dollars in retiree savings away from retail funds.”
KPMG Australia chief economist Dr Brendan Rynne questions in the AFR whether it really matters if the RBA cuts rates.
“The reality is that a drop in the cash rate to 1% in June will have a limited effect on increasing GDP in next financial year or the year after. KPMG modelling shows that a 50-basis-point drop in the cash rate in June will only increase real GDP by less than 0.1% in the 2020 financial year, and by about 0.1% in 2021 financial year.”
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