Day 542: 'Shop around'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 542.
Today in summary: Suncorp has given its acting CEO Steve Johnston a pay raise; ASIC has lost another court case; APRA will direct banks to hold more capital against risky loans; and mortgage brokers want different rules to financial planners.
-- Alex
@AlexESampson
Current banker panic level: 🤑🙄🤑🙄
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In a climate where banks are being warned to address problematic remuneration practices, Suncorp has lifted the pay for its acting CEO Steve Johnston. The bank has handed Johnston — appointed in May — a one-off equity award (of A$300,000, bringing his salary to A$1.3 million) as it searches for a permanent CEO. His 2020 target short-term bonus will be based on 100% of the fixed pay while he is acting CEO, the banking and insurance group reported to the ASX last night.
In a rough week for the corporate regulator in the courts, ASIC has lost another high-profile case. This time ASIC failed in the High Court to have an outback store owner who offered credit to his Aboriginal and Torres Strait Islander customers declared guilty of “unconscionable conduct”. On Friday ASIC lost a market manipulation court case against a NAB contractor.
This comes as ASIC launches civil action against collapsed firm Dover Financial Advisers and its director Terry McMaster. Dover was the guy who collapsed in the witness box at the banking royal commission last year. Fingers crossed for a better result this time.
AFR | The Australian | SMH
APRA has responded to the first phase of consultation on a proposal that will direct banks to hold more capital against specific loan types. The prudential regulator has suggested penalising banks for higher risk lending such as interest-only loans and loans to property investors. APRA reiterated that banks that already met the “unquestionably strong” capital targets announced in July 2017 should not need to raise additional capital to meet these new measures.
Meanwhile, APRA has also released a response letter and the final wording of rules on how the Banking Executive Accountability Regime will apply to variable remuneration arrangements for medium and small lenders. APRA received seven submissions during its consultation, none of which raised “any significant concerns” and there have been no material changes to the wording of the schedule.
AFR | The AustralianMortgage broking firm Australian Finance Group says an upcoming requirement for brokers to act in the best interests of customers needs specific consideration AFG does not want the measures to mirror the obligations imposed on financial planners. CEO David Bailey said a key policy question facing the industry would be how a “best interests duty" for brokers would work.
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Today’s burn prize: Bank customer Kate (not her real name)
“I think if they don't pass it on then our business is not that important to them, so I'd rather take my business elsewhere.”
Kate* told the ABC she and her partner moved banks after their original bank did not pass on last week’s interest rate cut.
The Commentariat
Personal finance writer John Collett breaks down which banks are offering the cheapest mortgages following the controversial recent rate cut. The message is shop around.
“People who previously considered themselves to be on a competitive mortgage interest rate may no longer have the best deal. Check your rate and, if not, shop around for an alternative.”
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