Day 564: 'Never guaranteed'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 564.
Today in summary: ASIC reckons investigations of motor vehicle insurance claims have become heavy handed; APRA has been accused of being driven by an “unhinged hatred” for former IOOF chief Chris Kelaher; the superannuation sector says it is “unrealistic” to prepare the industry and its customers for the government’s bill to change insurance provisions by October 1; Mike Baird has bowed out of contention to become NAB’s next CEO; ANZ, CBA, IBM, Scentre Group and Westpac have launched a live pilot for a new digital platform using blockchain technology; NAB suffered a payments blackout with customers unable to use its fast payments service; and Suncorp has been named Bank of the Year at Money magazine’s Consumer Finance Awards.
-- Alex
@AlexESampson
Current banker panic level: 😠🤡🧐😲👩🏻💻☹️😇
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ASIC reckons investigations of motor vehicle insurance claims have become too heavy handed, leading to poor consumer outcomes. The corporate regulator’s damning report into the “harmful and unreasonable” practices of the sector revealed that while only a small proportion of claims were investigated, more than 70% of investigated claims were found to be valid and then paid (only 4% were declined due to fraud).
ASIC’s research raises concerns that consumers are being worn down by a lengthy and confusing process, which often included “interviews that felt like interrogations”.
APRA has been accused of being driven by an “unhinged hatred” for former IOOF chief executive Chris Kelaher, against whom it has brought a Federal Court case for failing in his duties as a superannuation trustee. Kelaher’s barrister Robert Newlinds SC, made the comment during a session where he sought to have internal APRA documents excluded from evidence.
The prudential regulator wants Kelaher disqualified as a trustee, along with four other directors and executives from troubled wealth manager IOOF.
The superannuation sector says it is “unrealistic” to prepare the industry and its customers for the government’s bill to ban superannuation trustees from providing insurance on an opt-out basis to members who are under 25 or with balances below A$6,000 by October 1. The Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019 stalled at the May election but gained a second reading in the House of Representatives today.
An Australian Institute of Superannuation Trustees spokesman said the body was ramping up its advocacy to parliamentarians because it was concerned the bill did not contain exemptions to accommodate funds with younger members who needed insurance.
Former NSW premier Mike Baird has bowed out of contention to become NAB’s next CEO. The bank has been on the hunt for a boss since Andrew Thorburn became a casualty of the royal commission in February. The bank’s acting CEO Philip Chronican earlier this year said he would not provide a timetable for the process.
NAB confirmed Baird had decided he would not be in the running.
ANZ, Commonwealth Bank, IBM, Scentre Group and Westpac have launched a live pilot for a new digital platform using blockchain technology. Lygon has been developed to transform the way businesses obtain and manage bank guarantees that are often required as part of a retail property lease.
Historically, bank guarantees have been issued manually and on paper. Lygon is part of a move from banks to develop fintech and regtech solutions to help speed up processes, reduce margins and improve customer experience.
NAB suffered a payments blackout with customers unable to use its fast payments service that hangs off the New Payments Platform.
RBA assistant governor Michele Bullock recently roasted banks for a slow take-up rate and spike in outages under the central bank’s instant payments system. Bullock last week warned trust in the service would be eroded by outages.
Suncorp has been named Bank of the Year at Money magazine’s Consumer Finance Awards for the second consecutive year. The bank stayed out of trouble during the royal commission where it came out relatively unscathed.
Bank Australia won Customer-Owned Institution of the Year and ING took home Mobile Banking Provider of the Year.
🔥🔥🔥
Today’s burn prize: ASIC Commissioner Sean Hughes
“When it comes to insurance, consumers should expect and do deserve better.”
ASIC has conducted an investigation which found insurers are putting a “significant proportion” of consumers through a pressured process to approve claims in their quest to weed out fraud.
The Commentariat
International Monetary Fund managing director Christine Lagarde will inherit an ailing eurozone and an unhappy Trump in her new role as president of the European Central Bank, writes SMH senior business columnist Stephen Bartholomeusz.
“With China’s growth rate slowing and a question mark over the sustainability of US growth, the outlook for the rest of the world if the second-largest economic zone were to fall back into recession would be bleak.”
AFR columnist Jennifer Hewett discusses why Mike Baird doesn't want to be NAB's next boss after he withdraws from the snail’s pace race to replace Andrew Thorburn.
“The popular, easy-mannered Baird was always going to be an obvious inclusion on the list of candidates but his appointment was certainly never guaranteed. It’s still an open question whether his last two years at the bank would have been considered sufficient grounding by the board given the extent of the problems and the need for extensive, detailed operational experience in a much tougher regulatory environment.”
Elderly investors are suffering under the interest rate cuts, writes James Kirby in The Australian.
“Critics of the Reserve Bank’s lower-for-longer rates policy say all investors are being “pushed” into taking more risks with their savings. Among the suggestions to review the system is the concept of an independent body that would set deeming rates rather than the government, which sets them under a system which is not transparent. There have also been calls to “peg” the deeming rate to the official cash rate to make the system fairer.”
AFR financial services writer James Frost muses about whether NAB’s next CEO will come from Macquarie.
“Sources have suggested Macquarie’s deputy managing director and head of banking and financial services group Greg Ward would be perfect for the job. With NAB in need of a massive cultural overall, they say Mr Ward’s success in turning around Macquarie’s financial services arm should have placed him at the top of NAB’s wish list.”
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