Day 543: 'Will not hesitate'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 543.
Today in summary: CBA is selling its financial planning business; AUSTRAC has ordered the appointment of an external auditor to Afterpay; London-based neo bank Revolut launched its app in Australia; the RBA released a report analysing the barriers to uptake of its New Payments Platform; and incoming Labor senator Kristina Keneally has reportedly appointed former NAB spinner Chris Owens as her chief of staff.
-- Alex
@AlexESampson
Current banker panic level: 🤕🤒🤑🤑
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The Commonwealth Bank will sell its financial planning business Count Financial to ASX-listed subsidiary trust CountPlus for a bargain basement A$2.5 million. CBA said it would continue to manage remediation for misconduct at Count Financial, including after the sale. The sale is expected to cost the bank a post-tax loss of about A$13 million. The sale includes 359 planners at 160 advice firms with A$8.1 billion in funds under advice.
CBA bought Count Financial in 2011 for A$373 million, but following the royal commission joined other banks and began putting in place plans for divestment, with vertical integration slammed by Hayne as a key source of conflicted services. CBA owns a 35.9% shareholding in CountPlus and intends to sell up this holding “over time” after the sale of Count Financial.
Australian government financial intelligence agency the Australian Transaction Reports and Analysis Centre has ordered the appointment of an external auditor to Afterpay. The auditor will examine the buy-now pay-later lender’s compliance with the anti-money laundering laws.
AUSTRAC said the action followed a period of “ongoing engagement” with Afterpay over concerns with its compliance.
ASIC has allowed London-based neo bank Revolut to use its European electronic money licence to support its beta launch in Australia. The budgeting and money transfer fintech firm, which launched on the Australian market today with an app, is valued at US$1.7 billion (A$2.4 billion) and has more than five million customers across Europe.
Revolut said it had 20,000 Australians, who had been promised “freedom from hefty fees”, on a waiting list to use the app. Revolut reportedly has no plans to take deposits, so will not need an ADI license from prudential regulator APRA.
AFR | The Australian | SMH
The Reserve Bank today released a report analysing the barriers to uptake of its New Payments Platform. The report posits 13 recommendations to address the “slow and uneven roll-out” of the real-time payments platform, which was launched in February 2018, based on a public consultation with input from competition watchdog ACCC.
The report found banks were struggling with the complexity of integrating the NPP with their other systems, coupled with an underestimation of the investment required, which led to a slow uptake. By the end of the year the RBA wants the NPPA to enable sanctions, including possible fines, on banks that did not take up the NPP within a specific period of time.
Stakeholders said access issues were acting as barriers for new participants, such as the requirement that new participants were authorised deposit-taking institutions registered with APRA and must make a material capital contribution to the scheme.
The RBA will conduct another review before July 2021.
Incoming Labor senator Kristina Keneally has reportedly appointed former NAB banker Chris Owens as her chief of staff.
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Today’s burn prize: AUSTRAC CEO Nicole Rose
“We will not hesitate to take action where an organisation is failing to appropriately protect itself and Australia’s financial system from criminal activity.”
Rose said the buy-now pay-later sector had experienced rapid growth in recent years and today’s appointment of an auditor to check on Afterpay would remind new financial services businesses of their obligations to comply with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
“These laws are in place to protect businesses, the financial system and the Australian community from criminal threats,” Rose said.
The Commentariat
The RBA has backflipped on the job market, writes UNSW Business School economics professor Richard Holden in the AFR. RBA assistant governor Luci Ellis delivered the University of Melbourne’s Freebairn Lecture last night, discussing the “non-accelerating inflation rate of unemployment”. She signalled more than 100,000 of the currently 700,000 unemployed Australians could get jobs if monetary policy adjusts properly.
“If the lower end of the RBA range for the NAIRU is right then there are nearly a quarter of a million Australians currently without a job, who are desperately looking for one, who could be employed if the RBA gets policy right.”
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