Day 557: 'Dubious judgement call'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 557.
Today in summary: ASIC chair James Shipton today revealed the regulator’s seven strategic priorities for the year ahead, FASEA has released an online tool to help financial advisers plan their new education pathway; the MFAA is calling for a delay in the implementation of provisions for vulnerable customers under the new banking code; Macquarie has banned gambling and lottery transactions on its credit cards; and CBA has been reprimanded over privacy breaches.
-- Alex
@AlexESampson
Current banker panic level: 👩🎓🤕🙅♂️👮♂️
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ASIC chair James Shipton told delegates at a CEDA conference in Melbourne today that the regulator had seven strategic priorities for the year ahead, including protecting vulnerable customers, establishing itself as the conduct regulator for superannuation and addressing poor financial advice outcomes.
ASIC gave an update on its royal commission response, with Shipton saying the regulator was continuing to progress investigation and litigation from 13 cases referred by Commissioner Hayne.
FASEA has today released an online tool to give new entrants and existing financial advisers feedback on their required education pathway under new laws. The tool comes in addition to the standards authority’s education pathways policy, which responds to changes in education requirements for financial advisers under the Corporations Act 2001. The Education Standard applied to new entrants from January 1 this year and will apply to existing advisers from January 1, 2024.
The changes require all financial advisers to complete a bachelor or higher degree, or equivalent qualification, approved by FASEA. The Education Pathways Tool includes FASEA’s currently approved degrees and FASEA approved recognition of prior learning course work.
Meanwhile, FASEA also today confirmed the recognition of coursework from the Association of Financial Advisers (AFA) and Self-Managed Super Fund Association (SMSFA) as part of its education standards.
The Mortgage and Finance Association of Australia has called for a delay in the implementation of provisions for vulnerable customers under the new banking code. The Australian Banking Association’s revised Banking Code of Practice, which comes into action on Monday, adds new protections for vulnerable borrowers. The MFAA and Finance Brokers Association of Australia have been in discussions with the ABA, flagging undue and additional legal risk for brokers.
Banks this week scrambled to finalise their policies on financial abuse in line with the code, including provisions for domestic and family violence, and to ensure people are not being coerced into a loan.
Mortgage brokers are being required by some banks to assist in meeting their obligations under some elements of the code, and some lenders are requiring declarations or attestations to be signed by brokers. The FBAA has urged brokers not to sign any declarations. MFAA CEO Mike Felton said the code’s requirements were being implemented in a “piecemeal manner” by different lenders, without broker consultation.
“While we support the objectives of the code, these new requirements come with significant unintended consequences,” Felton said.
From July 1 Macquarie will ban gambling and lottery transactions on its credit cards. The changes will mean any transactions classified under the merchant codes as gambling will be blocked when the card holder tries to pay.
The move is in response to industry and regulator concern over easy access to credit for problem gamblers or young people who are not adept at managing their finances, including the recent Senate Economics References Committee report into Credit and financial services targeted at Australians at risk of financial hardship.
Macquarie will also remove the international fee of 3% charged on overseas cash withdrawals and the standard cash advance interest rate will be reduced. The changes are part of an overhaul designed to help customers avoid problematic credit card debt.
The Office of the Australian Information Commissioner has put CBA in the naughty corner over its failure to significantly improve its privacy practices. The OIAC today accepted an enforceable undertaking from the bank promising more work to improve the management and retention of customers’ personal information.
The EU follows CBA’s ongoing work to address two incidents — one in 2016 where it lost magnetic tapes containing up to 20 million customers' details and the other where bank staff had access to systems containing personal information about life insurance customers in 2018.
The Australian | AFR | SMH
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Today’s burn prize: MFAA CEO Mike Felton
“Mental health and domestic violence are complex areas. Brokers are not trained counsellors and therefore cannot be expected to perform psychological assessments.”
Felton was discussing the new ABA Banking Code of Conduct which will require lenders, and by extension brokers, to assess whether customers are deemed vulnerable.
The Commentariat
APRA’s disqualification case against IOOF’s chair and chief will put directors on notice, writes The Australian’s senior columnist John Durie.
“In short, there is a lot riding on this for APRA although, in its defence, it must be said regulators should test the law, which is not the same as saying they should win every case. Its stance in the IOOF matter is unusual because it seems it is relying purely on documentary evidence to support its case with no witness statements or expert opinion.”
Afterpay needs to mature and appoint an independent chairman, argues Elizabeth Knight in the SMH. Now with a lot more investor money at stake, and lots of regulator scrutiny, Knight reckons the buy now, pay later platform needs to grow up and stay out of trouble.
“You really have to question whether its two founders, Nick Molnar and Anthony Eisen should have offloaded almost A$100 million worth of shares earlier this month. While completely legal, it falls into the basket of a dubious judgement call. Whether a cynic or a supporter, the fact remains that shareholders have made a lot of money from an investment in Afterpay. But a bit of governance discipline is still sorely needed.”
Corporate regulators ASIC and APRA are under intense pressure to fix Australia’s flawed corporate culture, writes banking and finance specialist Karen Maley in the AFR.
“Despite howls of outrage from some directors, there's a general consensus among highly regarded business leaders that it is reasonable for ASIC to get a fresh and independent assessment of corporate culture.”
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