BFCSA Blog

Retail funds dominate in 50 worst-performing super investments The Australian 12:00am January 19, 2019 Anthony Klan   EXCLUSIVE  Every one of the 50 worst-performing balanced superannuation investments over seven years has been operated by retail funds such as ANZ, Westpac and IOOF, with just one product offered by the for-profit sector making it onto the list of the top 135 performers. In revelations that categorically bring to an end the fierce three-decade dispute between retail and industry funds over which is superior, secretive and highly detailed industry data obtained by The Weekend Australian shows that regardless of the investment timeframe or level of risk involved, retail funds are unquestionably consistently at the bottom and industry funds are consistently at the top. Despite every worker being forced to divert a portion of every pay packet into compulsory super since it was introduced in 1992 — and the key choice most people face...

7.30 Report’s “House of Cards” (Part 2) does the credit crackdown Macro Business11:15 am on December 12, 2018 Leith van Onselen ABC 7.30 Report last night aired the second of a three part special on Australia’s budding housing bust, which is well worth watching. The episode focussed on how the credit crackdown is putting heat on buyers and developers. The episode first features several quotes about systemic mortgage fraud and loose lending: MS ROWENA ORR, QC, SENIOR COUNSEL ASSISTING: Multiple bank employees across multiple branches in the Greater Western Sydney area were accepting false documents in support of loan applications. ANTHONY WALDRON, NATIONAL AUSTRALIA BANK LIMITED: People did step outside their responsible lending guidelines. ROWENA ORR: There were unsuitable loans. There was false documentation. KAREN COX, FINANCIAL RIGHTS LEGAL CENTRE: Just really inappropriate lending. We don’t resile from anything that the royal commission has identified… It then featured a short discussion...

Shadow banks grab market share with big borrowing savings for property buyers Australian Financial Review 12 Dec 2018 3:19 PM Duncan Hughes   Shadow banks are grabbing property market share from the majors with rates nearly 80 basis points cheaper and faster loan approval, analysis of rates and conditions shows. The banks, which are not authorised as deposit-taking institutions, are growing at 2½ times than their rivals but still account for only 9.5 per cent of the mortgage market, according to analysis. The regulation-light sector has avoided most of the consumer fall-out from the banking royal commission and restrictions imposed on the majors by prudential regulators, such as caps on lending and pressure to intensify scrutiny of borrowers' income and spending. They have also shown a greater risk appetite by continuing to target low-documentation borrowers, who are typically self-employed or small business owners that do not have access to pay slip...

NAB chief tells inquiry banks started ‘drifting’ from customers 20 years ago Andrew Thorburn says he is ashamed of how National Australia Bank has behaved in recent years https://www.theguardian.com/australia-news/2018/oct/19/nab-chief-tells-inquiry-banks-started-drifting-from-customers-20-years-ago The National Australia Bank chief executive, Andrew Thorburn, has conceded that problems began seeping into the country’s banking industry two decades ago. He says that when he entered banking 30 years ago, he was taught that banks existed to serve customers, but the industry started to “drift” in the late 1990s and he was ashamed of how NAB had behaved in recent years. It means two-thirds of his banking career has been spent in an industry drifting away from customers. “When I started in banking, it was serving customers, [that] was what was drilled into us [about] why we existed,” Thorburn said on Friday.  It is greed that has led Australian banks to steal from dead people Richard Denniss     Read...

CBA mulled warning dead customers about fees in product disclosure statement Australian Financial Review Aug 15 2018 4:14 PM James Frost   The Commonwealth Bank's superannuation trustee, Avanteos Investments Limited, considered covering its tracks over the charging of dead people for financial advice by updating its product disclosure statement (PDS), the Hayne royal commission heard. Counsel assisting Michael Hodge, QC, was questioning Colonial First State's executive general manager Linda Elkins about a range of conflicts within the bank's superannuation trustee business, including the charging of dead customers for financial advice. Ms Elkins explained that following revelations that the bank's financial advisers had been charging dead customers for financial advice back in April, a review of the bank's superannuation arm took place which revealed it was charging dead superannuation customers as far back as 2015. Ms Elkins said that in a review conducted this year, it was found that a way to...

Suncorp used 'tax surplus' for admin rather than return money to members Sydney Morning Herald 14 August 2018 5:53am Clancy Yeates   Suncorp's superannuation trustee used tax refunds within funds to purchase administrative services from other parts of the financial conglomerate, instead of returning the money to members as many funds do, the royal commission heard. As part of its scrutiny of superannuation trustees, the Hayne royal commission on Monday afternoon turned its attention to how Suncorp used what it called a "tax surplus." This referred to member funds that were collected for taxation purposes, but the fund ended up with a surplus because of deductions. Senior counsel assisting the commission, Michael Hodge QC, questioned Maurizio Pinto, the head of the office of the trustee within Suncorp Portfolio Services Limited (SPSL), about the arrangement, and the monitoring of the services provided. Mr Hodge said "many" other super funds dealt with a...

Banking royal commission: super rip-offs, gouging revealed The Australian 12:00am August 7, 2018 Ben Butler, Elizabeth Redman, Michael Roddan   Australians are being ripped off by super fund trustees “surrounded by temptation” to do the wrong thing with the $2.6 trillion retirement savings pile, while regulators are failing to search out and punish bad behaviour, the banks royal commission has heard. In one example of fee gouging outlined at the royal commission yesterday, NAB charged a customer of its MLC division an array of fees that gobbled up $892.20 of $1101.95 earned from a year-long investment in the simplest option available, cash. As the commission investigates the inner workings of the compulsory superannuation system over the next two weeks of hearings, it will explore how retirement savers are swindled through fees for services they never receive, cosy deals between retail super funds and the banks that control them, account-draining insurance premiums,...

Watchdog failed to act on warning over super fees The Australian 12:00am July 23, 2018 Anthony Klan   EXCLUSIVE  The regulator responsible for the nation’s $2.6 trillion superannuation nest egg was warned by its analysts eight years ago that the major banks and finance companies were charging members more than 2½ times the market rates for services, delivering them billions of dollars a year in extra profits. A 2010 research paper published by the Australian Prudential Regulation Authority — which can now be accessed only via a federal government archive — shows excessive fees charged by the managers of the retail, or for-profit, funds have been systemically eating into the retirement savings of millions of workers. Despite the peer-reviewed academic paper being written by APRA’s own analysts, including then APRA research head Bruce Arnold, the regulator has not only failed to take any significant steps to address the issue, it has...

How ASIC closed in on AMP’s ‘orphan’ customers The Australian 12:00am July 16, 2018 Pamela Williams   The key document that sparked AMP to commission Clayton Utz last year to investigate its “fees for no service” scandal was already in the sights of the corporate regulator before the consultancy’s ­report was ever completed and handed to the AMP board. This explosive AMP internal document, which became known at the corporate regulator as the “orphan contracts document”, five years ago canvassed the ­severe risks for AMP if it did not cease charging fees on so-called “orphan policies” where clients had no financial adviser. The Australian Securities & Investments Commission was sharply tightening its focus on AMP last year with demands for historic paperwork after several years of investigating AMP and big banks over fees for no service. The formal demand from ASIC for all records relating to the orphan contracts document was...

APRA rejects claim it needs to do 'a better job', blames ASIC Australian Financial Review Mar 28 2018 12:56 PM James Frost   Australian Prudential Regulatory Authority chairman Wayne Byres has denied his organisation was unable to keep the banks in line and said there is little evidence of a lending free-for-all. After more than an hour of questioning of about revelations of lax lending standards from the Hayne royal commission, he told the House Economics Committee  that while there was a small cohort of borrowers who would have difficulty servicing loans when rates move higher there was no sign of a broader problem. "We are still dealing with an environment in which arrears are not particularly high, they are higher than they have been for a while, but if lending was a free-for-all in the way that some are suggesting I think arrears rates and other things, indicators of financial...

BFCSA Members sent in 400 letters and evidence of fraud to CORRUPT ASIC re 2012 Mortgage Fraud.  ASIC told Parliament in evidence: NO SYSTEMIC issues in banking and mortgages.................................................. BFCSA Members AGREE that ASIC cannot be trusted to handle consumer complaints.  Collectively we have amassed mountains of evidence of the corruption if ASIC, sustained over 8 - 10 years.  ASIC protected the Bankers and demonised Consumers and Borrowers.  I personally had over 30 meetings with ASIC executives for over 19 years.  The Commissioners have been fully briefed.  ASIC should have been asking BFCSA/RECA discover the Australian Bankers Control Fraud and Mortgage Fraud.   BREAKING NEWS.....TODAY! ASIC have told the Senate committee on Wednesday that it's finally decided to 'look into' mortgage fraud and see for themsleves "how wide spread it really is!!!"  This is despite ASIC's blatant lies to the Senate, time and again: "we can see no evidence of systemic issues!" CORRUPT ASIC have sat on a mass...

FBAA defends commission model to Senate inquiry   1 May 2017   Annie Kane   https://www.theadviser.com.au/breaking-news/36012-flat-fee-model-could-lead-to-poor-consumer-outcomes-fbaa   The industry association has defended the current broker commission model to the Senate economics references committee and warned that switching to a flat fee model could lead to “extremely poor consumer outcomes”.   At a public hearing in Sydney last week, the executive director of the Finance Brokers Association of Australia (FBAA), Peter White, was questioned on the Australian Securities & Investments Commission (ASIC) report into remuneration and whether there were any poor consumer outcomes happening in the broker sector.   Touching on the ASIC recommendation that lenders “change their standard commission arrangements so that brokers are not incentivised purely on the size of the loan”, the senate questioned whether fees for service, rather than commissions, would be a suitable alternative.  However, Mr White told the senators that this would not be in the best interest of the...

Record numbers under mortgage stress   1 May 2017 Duncan Hughes http://www.afr.com/personal-finance/record-numbers-under-mortgage-stress-20170501-gvw2vt Record numbers of Australian households face mortgage stress as large loans and rising interest rates start to bite, according to detailed analysis of lending, repayments and household incomes. Affluent suburban postcodes feature among an estimated 1000 households a week expected to face mortgage default over the next 12 months, the analysis reveals. "Debt stress momentum is unprecedented," according to Martin North, principal of research firm Digital Finance Analytics, who has been doing the survey for more than 15 years.  "This is not just about mortgage battlers. It is also hitting the households with bigger incomes and more leverage. It is worrisome," Mr North said. Numbers of borrowers in severe distress has increased by about one-third to about 32,000 in the past 12 months, he said.  Concern that 767,000 households – or one-in-four across the nation – are facing financial distress...

ASIC admits product manufacturers try to shift blame   1 May 2017   Mike Taylor   http://www.moneymanagement.com.au/news/financial-planning/asic-admits-product-manufacturers-try-shift-blame   The Australian Securities and Investments Commission (ASIC) has acknowledged that product manufacturers have too often blamed distributors such as financial planners when product failures have occurred.   ASIC deputy chairman, Peter Kell has told the Senate Economics Committee inquiry into consumer protection in the banking, insurance and financial sector that such instances have occurred over many years.   Explaining why ASIC was pursuing a product intervention power, Kell said there had been an unwillingness on the part of product manufacturers to take responsibility.   Related News:   ·         Investment leaders need to transform their business   ·         Average 3.8 days for approval to go off APL   “… one of the problems we have typically encountered over many years in this sector is that if something goes wrong you often have the product...

300,000 Victorian households struggling to meet repayments Michael Mata 28 April 2017 http://www.yourmortgage.com.au/article/300000-victorian-households-struggling-to-meet-repayments-235555.aspx   Hundreds of thousands of Victorian households are under mortgage stress, and many more would be pushed to the brink of defaulting on their loans if banks continue to hike their interest rates, warns consulting firm Digital Finance Analytics (DFA).  Some 300,000 Victorian homeowners are struggling to meet their mortgage repayments – a figure that would nearly double if interest rates were to rise by 2%. As the Turnbull government scrambles to tackle the housing affordability crisis in the upcoming May budget, economists warn that rising interest rates would hurt those who’re barely holding onto the property ladder.  Modelling produced by the DFA shows that property-owning, working-class families in Narre Warren, Craigieburn, Endeavour Hills, and Berwick are facing the most acute mortgage stress. Even a mere 0.5% interest-rate rise would put an additional 50,000 owner-occupiers and investors...

The financial curse - watch the video!       We can't 'hold back the tide' in housing market: APRA's Wayne Byres   Clancy Yeates   28 April 2017-04-28   http://www.smh.com.au/business/banking-and-finance/we-cant-hold-back-the-tide-in-housing-market-apras-wayne-byres-20170428-gvuqk4.html   Australia's powerful banking regulator has stressed it cannot "hold back the tide" of the property cycle and exert control over house prices, underlining the limitations of recent curbs on bank home lending.  Wayne Byres, chair of the Australian Prudential Regulation Authority, highlighted this reality as he also flagged "further tightening" from banks in the $1.5 trillion mortgage market.   In response to a rapid build-up of household debt and soaring Sydney and Melbourne house prices, Mr Byres last month unveiled new caps on interest-only lending by banks, causing lenders to raise interest rates for some borrowers.  ANZ was the latest bank to respond on Friday, raising fixed interest rates for customers taking out interest-only home loans by up to 0.4...

  Inside the House of Reps banking inquiry   By Christian Edwards   1 Day ago   Banking   https://www.rfigroup.com/australian-banking-and-finance/news/inside-house-reps-banking-inquiry     The political divide within the House of Representatives Standing Committee on Economics inquiry into the banking sector has been thrown into stark relief with the public release of its second report, revealing the frustration of non-government members forced to march to the majority’s beat.   In November 2016 the government-heavy, ten-member committee - including three Opposition and one Greens member - tabled its first ten recommendations to improve the banking system for Australian consumers.   According to committee chair, Liberal MP David Coleman, the second report affirms these and calls on Government implementation, as well as backing the abolition of non-monetary default clauses for loans to small business – a matter examined by the Australian Small business and Family Enterprise Ombudsman, Kate Carnell.   “Each of these Recommendations should...

ATSB ‘look guilty of cover-up’, says MH370 victim’s widow The Australian 12:00am April 20, 2017 Ean Higgins   Australian and Chinese families of those who died on Malaysia Airlines flight MH370 yesterday expressed outrage at Australian authorities’ refusal to release crucial documents, with an Australian widow saying it made them “look more guilty” of a cover-up. Danica Weeks, whose husband Paul perished when the flight went missing three years ago, called on Australian Transport Safety Bureau chief commissioner Greg Hood to reverse his decision to reject a freedom of ­information request from The Australian. “Who are they trying to save face for; is it the Malaysians or the ATSB?” Ms Weeks, who lives on Queensland’s Sunshine Coast, said yesterday. Mr Hood upheld another ATSB officer’s decision to not ­release opinions of an international team of experts about satellite data which the bureau claims support its theory that MH370 went down in...

APRA should have been more diligent on monitoring data!  F for fail!  Problem for APRA,  they have simply been passing on Bank stats to Treasury and banks lie all the time as to true stats.  So we end up with FAKE STATS and DATA.     New Bank data on investor loans 'may' prompt APRA action 26 March 2017 http://www.abc.net.au/news/2017-03-26/trump-administration-dominates-markets-apra-tightens-investment/8386974   Locally is also a bit light-on in terms of fresh data, although February's Reserve Bank's private sector credit survey (Friday) will be keenly watched given investor lending for property appears to have slipped from under the bank regulator's thumb and is growing rapidly again. APRA has bluntly told the big banks they are running near the 10 per cent annual growth speed limit for investor loans. The banks responded by jacking up mortgage rates — particularly for investors — and tightening lending rules. Another spurt could see the lending speed...

If this sort of crap goes on we’d be better off running the country ourselves...now down to public servants working at Maccas and the PM’s trusted asxeman lobbying for Milo McFlurrys’ to be on the menu!  So much for national broadband...and who was responsible for that mess?   Senator James McGrath writes letter to McDonald’s Australia boss to get the Milo McFlurry here Claire Bickers, News Corp Australia Network March 3, 2017 12:48pm http://www.perthnow.com.au/business/work/senator-james-mcgrath-writes-letter-to-mcdonalds-australia-boss-to-get-the-milo-mcflurry-here/news-story/f63f18705078dfd27f510ceb703897f6 A TURNBULL Government minister with a well documented love of Milo is now petitioning McDonald’s to introduce the “Milo McFlurry”. Queensland Senator James McGrath, who is also the Assistant Minister to the Prime Minister, has written to the fast food giant to lobby for “this very Australian dessert” to be added to its menu. The senator took up the fight after McDonald’s Malaysia announced it would reintroduce the Milo McFlurry and McDonald’s Australia confirmed it had no...