Day 541: 'Undue pressure'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 541.
Today in summary: Non-bank lender Prospa floated on the ASX; CBA’s financial planning arm has finally complied with a court enforceable undertaking; and ASIC has lost a market manipulation court case against a NAB contractor.
-- Alex
@AlexESampson
Current banker panic level: 🤑👼😒
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Non-bank lender Prospa successfully floated on the ASX today — its second attempt at an IPO. The fintech has also announced an expansion into payments via a buy-now, pay-later service for small businesses to buy stock and equipment. It has pledged to pass on lower funding costs of its fintech model to borrowers.
This comes as the pace heats up in the fintech sector, with EY's latest Global FinTech Adoption Index, released last week revealing 58% of digitally-active Australian consumers were now using fintech products and services, up from 37% in 2017.
This comes as Australian payment innovation fintech Verrency today updated its total investment to more than A$20 million. The API platform lets banks and card issuers offer services such as auto-rounding, real-time budgeting notifications and instant loyalty rewards.
Meanwhile, Afterpay founders will sell about A$100 million worth of stock to new investors alongside a A$300 million capital raising to fund an expansion into the US.
AFR | SMH | The Australian
CBA’s financial planning arm has finally complied with a court enforceable undertaking from corporate regulator ASIC. The undertaking was struck in April 2018 over CBA’s fees for no service misconduct. ASIC said it was satisfied the bank had complied and taken “reasonable steps” to identify and repay customers. The bank’s remaining remediation of clients must be completed by September 30.
CBA vowed it had made “material changes” to its systems and processes and could now track its obligations to customers. In January ASIC issued a warning to CBA because it was not meeting the obligations of the undertaking, which included ending ongoing service fees and not entering into any new ongoing service arrangements with customers.
ASIC has lost a market manipulation court case against a NAB contractor. The corporate regulator alleged a trader working for NAB caused a multibillion-dollar spike in trading on the ASX 200. But on Friday the Federal Court dismissed the case against financial services firm Whitebox Trading and its director at the time Johannes Boshoff.
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Today’s burn prize: The Law Council of Australia
“It is entirely appropriate for any defendant to rely on the rights and protections developed over centuries to ensure the proceedings ASIC is bringing against them are conducted fairly.”
The council questioned the appropriateness of comments last week by ASIC deputy chair Daniel Crennan, warning the big banks not to test ASIC’s patience by dragging out litigation. The Law Council said the comments “may put undue pressure on parties not to contest proceedings or raise legitimate issues for determination by a court”.
The Commentariat
The exodus of financial planners is gaining momentum as regulatory reforms shake up the industry, writes business correspondent Richard Gluyas in The Australian.
“Key players AMP, IOOF and the major banks lost a combined 454 advisers in the three months to May — a 5.3% decline to a record low of just under 8100. The broader sector suffered as well, shedding 1115 advisers over the same period to 27,310.”
Afterpay has emerged as one of the most remarkable and divisive stories on the Australian sharemarket, writes business, media and technology writer John McDuling in the SMH.
“For a while now, a fierce battle has been raging in the investment community over Afterpay. There's a significant cohort of short-sellers who are convinced the company's business model is weak and its heroic valuation unsustainable.”
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