Day 561: 'Just nice words'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 561.
Today in summary: The ABA’s new Banking Code of Practice came into force; the superannuation class action against Suncorp has been lodged in the NSW Supreme Court; the CBA board announced it had renamed its Remuneration Committee and beefed up its responsibilities; ASIC will hold public hearings as part of consultation on proposed new responsible lending obligations; the Reserve Bank of New Zealand released 170 submissions on its capital review; and APRA has granted international specialist banking and asset management group Investec Bank Plc a licence to operate as a foreign ADI.
-- Alex
@AlexESampson
Current banker panic level: 🧐🕵️♂️🤩🤥😡🤑
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The ABA’s new Banking Code of Practice came into force today, including beefed up rules to prevent misconduct. It increases protections for low-income earners, guarantors and credit-card holders, and prohibits the selling of insurance with credit cards and personal loans.
The system will be overseen by a Banking Code Compliance Committee, which also kicked off today. The BCCC will work with banks to ensure the high standards of service and other promises made to customers through the code are adhered to.
Meanwhile, mortgage brokers last week called for a delay in the implementation of provisions for vulnerable customers under the new code. FBAA managing director Peter White told Australian Banking Daily a workable solution was needed immediately.
Also kicking off today were Hayne changes for superannuation, open banking, whistleblower protections, grandfathered commissions, capability reviews of regulators and the BEAR.
The William Roberts Lawyers class action against Suncorp has been lodged in the NSW Supreme Court. The Queensland insurance and banking group is in hot water over superannuation commissions paid to financial advisers.
Meanwhile, the APRA case against IOOF is underway in the Federal Court, which heard that IOOF directors and senior management failed to consider conflict of interest issues in its super funds.
The CBA board today announced it had renamed its Remuneration Committee the People and Remuneration Committee, and beefed up its responsibilities. Extra focus will be given to people and remuneration strategies, talent management, diversity and inclusion, and organisational culture.
Director Paul O’Malley has been appointed as the chair of the committee, starting January 1, 2020, following Sir David Higgins’ retirement on December 31.
ASIC will hold public hearings as part of consultation on proposed new responsible lending obligations. The consultation began in February 2019, and ASIC has received 72 submissions. The big four banks have made clear they’re not fans of measures to prevent people from over-borrowing.
The hearings, which will be live streamed online, are aimed at testing the views of stakeholders and providing greater understanding of business operations.
The Reserve Bank of New Zealand today released submissions on the latest consultation paper in its capital review, which proposes several measures to ensure a safer banking system.
Banks with Australian parents noted they were required to earn a minimum rate of return, and that would not change even with higher capital ratios. APRA proposed to increase Tier 2 capital requirements.
Submissions argued RBNZ’s capital requirements should better align with those of APRA, as this would help promote financial system efficiency. Some banks also noted that the ability of their Australian owners to issue more share funding to their NZ subsidiary banks may be constrained by APRA’s rules on related party funding.
Prudential regulator APRA has granted international specialist banking and asset management group Investec Bank Plc a licence to operate as a foreign authorised deposit-taking institution. The South African group sells financial products and services to the UK and Europe, Southern Africa, and Asia-Pacific.
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Today’s burn prize: Aggrieved banking customer Craig Caulfield
“It’s just nice words.”
Caulfield did not have much hope that banker behaviour would improve under the new Banking Code of Practice, which came into effect today.
The Commentariat
From today banks will operate under a new banking code, but Australian Banking Association chief Anna Bligh argues in The Australian that customers should “judge them by their actions”.
“Change starts at the top. The new code of practice has the active support of the leaders of Australia’s banks. They have used it to set higher standards of behaviour and provide new benchmarks for customer protection. They have resourced and prioritised its implementation and they are using it to promote improved culture across their banks. And they know they will be judged on their actions, not their words.”
Bankers are preparing for round two of interest rate “Game of Thrones” tomorrow, writes Karen Maley in the AFR.
“As Reserve Bank of Australia board members prepare to fly to Darwin for this month’s meeting, the country's top bankers are dusting off their textbooks on game theory as they prepare their responses. Financial markets still expect that the Reserve Bank will announce a further 0.25 percentage point cut in official interest rates on Tuesday, which would push the cash rate down to a new record low of 1%, although confidence has been wavering in the past few days.”
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