BFCSA Blog

Led by award-winning consumer advocate Denise Brailey, BFCSA (Inc) are a group of people who are concerned about the appalling growth of Loan Fraud around the world. BFCSA (Inc) is a not for profit organisation in the spirit of global community concern and justice.

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Bad reporting by the banks raises serious questions Analysis The Drum By Stephen Long Posted 5 Nov 2015, 6:43pm Thu 5 Nov 2015, 6:43pm http://www.abc.net.au/news/2015-11-05/long-bad-reporting-by-the-banks-raises-serious- questions/6916736   The Reserve Bank revealed today that financial institutions have substantially underreported the amount of housing loans held by investors. Not only does this lead to an understatement of the risk in the housing market, it raises serious question about the supervision of our banks, writes Stephen Long.   How on earth did Australia's banks understate investor housing loans by $50 billion?   What does it say about policy that we now have a situation where landlord loans make up 40 per cent - 40 per cent! - of all outstanding residential mortgages?   These are just some of the questions that arise from the revelations today by Reserve Bank deputy Governor Philip Lowe.   The new estimate of the investor loans apparently came as...
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Australian banks understated the value of investor loans by $50 billion: RBA By finance reporter Sue Lannin Updated 5 Nov 2015 http://www.abc.net.au/news/2015-11-05/australian-banks-understated-the-value-of-investor-loans-rba/6915488 Updated 5 Nov 2015, 3:49pmThu 5 Nov 2015, 3:49pm   A senior Reserve Bank official has taken a swipe at Australian banks for their lending standards, amid big errors in bank loan data that saw them understate the value of loans to investors by $50 billion.     RBA deputy governor Philip Lowe told a financial conference in Sydney that the central bank was concerned by reviews of loans to investors by the banks over the past six months that found "very large upward revisions to the value of investor loans outstanding".   Mr Lowe said more than 10 financial institutions, including two of the biggest lenders, found their outstanding investor loans were $50 billion, or 10 per cent more, than they previously thought. "As lenders have looked more...
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NAB faces fresh misconduct claims over false witnessing Georgia Wilkins 27 May 2017 http://www.smh.com.au/business/banking-and-finance/nab-faces-fresh-misconduct-claims-over-false-witnessing-20170524-gwcnfn.html Signing on the dotted line is considered a solemn act, something that involves the utmost care and consideration. This could be particularly so when holding a pen above a form that will determine who will rightly receive your superannuation should you die. But for financial planners, the task of getting documents signed and witnessed can be monotonous and time consuming – time that could be spent meeting ever increasing sales targets. That may explain why financial planners inside National Australia Bank's wealth division have been routinely cutting corners. In particular many in NAB's hundreds-strong workforce have apparently been falsely witnessing death beneficiary forms – legally binding documents that determine who gets a person's superannuation when they die. The practice is not illegal but marks a significant breach of the bank's code of conduct and may impact its...
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All Heck Breaks Loose in Toronto’s House Price Bubble by Wolf Richter • May 24, 2017  It’s fear.” http://wolfstreet.com/2017/05/24/toronto-house-price-bubble-pops/ During the first two weeks in May, according to preliminary data from Toronto Real Estate Board, home listings surged 47% from the same period last year even as sales plunged 16%. The average selling price dropped 3.3% from April – and this, after a 33% year-over-year spike in home prices in March and a 25% surge in April. Something is happening to Toronto’s blistering house price bubble. Canada’s largest alternative mortgage lender, Home Capital Group, which focuses on new immigrants and subprime borrowers turned down by the banks, is melting down after a run on its deposits that crushed its funding sources. The industry is worried about contagion. At the same time, the provincial government of Ontario announced a slew of drastic measures, including a 15% tax on purchases by non-resident foreign...
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Big banks' 'too big to fail' guarantee obsolete, ME Bank chief says 26 May 2017 http://www.msn.com/en-au/money/company-news/big-banks-too-big-to-fail-guarantee-obsolete-me-bank-chief-says/ar-BBBvDcm?li=AA54Gb&ocid=ientp   Mr. McPhee says the implicit guarantee clearly helped the big four banks dodge a credit rating downgrade earlier this week when Standard & Poor's (S&P) cut the status of 23 financial institutions including ME Bank. "The four major banks and Macquarie Bank weren't downgraded because of their too big to fail status so that's done nothing to level the playing field," Mr. McPhee told The World Today. "This too big to fail implicit guarantee is providing them [the major banks] with an explicit benefit and that in effect has been provided by you and me — the taxpayer." In announcing the ratings downgrade on second-tier institutions on Monday, S&P reaffirmed the status of major banks "reflecting our expectation of likely timely financial support from the Australian Government if needed". But Mr. McPhee said the...
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Banks losing battle in image repair, leaked documents reveal Australian Financial Review May 25 2017 11:45 PM Phillip Coorey   Australia's banks spent almost $7 million in a year trying to fix their image and ward off a royal commission, but the strategy had "close to zero" effect on consumers or public perception, freeing the government to ambush the sector in the budget with a $6.2 billion tax. Leaked documents, which include agenda papers from several Australian Bankers Association meetings, plus a new battle plan drawn up in April by the ABA's public relations consultants, Newgate, highlight an acute awareness inside the sector about its image problem, a frustration at being unable to combat it, and increasing concern at the level of populist parliamentary attacks. With Labor, the Greens, minor parties and independents all pressing for a royal commission, and the government imposing more regulation and accountability measures on the sector to ward off the commission calls,...
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Big mortgages squeeze home buyers' basic living costs Australian Financial Review May 22 2017 11:00 PM Sally Patten   Borrowing six times a household's salary to buy a property would make it difficult for many people to cover even basic living costs, says financial adviser Adele Martin of Firefly Wealth. Ms Martin said that borrowing such a large multiple of income could trigger a debt spiral as homeowners turned to credit cards to pay for both unexpected and everyday living expenses. The problem would be exacerbated by a rise in interest rates, she said. "At six times salary, with any rise in interest rates, any unexpected expenses, like a vet bill, are going to cause trouble. It could get people into a credit card debt cycle that is hard to get out of," Ms Martin said. She was speaking after a report by investment fund JCP Investment Partners found that the...
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Banks cave in on overdraft clause The Australian 8:02pm May 25, 2017 Robert Gottliebsen   Finally, after 18 months, the banks have caved in on small business bank overdraft agreements. Many tens of thousands of small enterprises around Australia, including farms, are now set to have their bank overdraft agreements completely rewritten. The horrendous clauses that gave banks total power to do anything they wished and made conducting small businesses in Australia using a bank overdraft an incredibly risky affair have been removed on all agreements signed since November 12 2016. Ironically the agreement between the banks and the Australian Securities and Investments Commission (ASIC) and the Australian Small Business and Family Enterprise Ombudsman was concluded on budget eve and the agreement got lost the budget storm over the bank tax. Also ironically while one part of ASIC was negotiating with banks on overdraft contracts and the other was working with...
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ASIC chairman Greg Medcraft flags new broker guidelines on conflicts Australian Financial Review May 25 2017 5:39 PM Joyce Moullakis   The corporate regulator is poised to release stringent guidelines around Chinese walls at stockbroking firms, to "preserve the independence" of research after a string of incidents, chairman Greg Medcraft said on Thursday. The Australian Securities and Investments Commission boss said the new guidelines would be released imminently, after the regulator had scrutinised processes across the industry. "We've had some instances as you know ... we've had some learnings about separating research and the underwriting function," Mr Medcraft told reporters on the sidelines of the annual Stockbrokers and Financial Advisers Association (SAFAA) Conference. "What we've got to do is to make sure the walls are pretty solid between the two and that there can't be pressure. "The people doing the capital underwriting and the fundraising shouldn't be able to influence what...
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How Anna Bligh’s Australian Bankers Association coup was sealed The Australian 12:00am May 26, 2017 Pamela Williams   It was early on a Friday morning — February 17 — that National Australia Bank chief executive Andrew Thorburn picked up the phone to call Labor’s Treasury spokesman, Chris Bowen. This was a prearranged courtesy call and Thorburn had startling news for Bowen: Anna Bligh, one of the fighting machines of the Labor pantheon and a former Queensland premier, had been appointed chief executive of the Australian Bankers Association — the business lobby group ­focused on blocking Labor deman­ds for a royal commission into the banks. Bowen was astonished. “Well, I’m hard to surprise these days in politics, but you’ve managed it,” he told Thorburn. He added: “I suspect that if you haven’t spoken to the Treasurer yet, you’ll get a colder reception than from me.” Scott Morrison was on a plane bound...
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EPA keeps contamination hidden to protect property prices Sydney Morning Herald May 27 2017 - 6:00am Mario Christodoulou, Patrick Begley   The state's chief environmental watchdog has been keeping "significant" chemical contamination hidden to protect residential property prices, internal documents show. The Environmental Protection Authority told a government review that it wanted to avoid "unnecessarily blighting" land values and could be trusted to manage the contamination without its usual public disclosure. Macquarie University professor Mark Taylor, who led the review, found the authority had decided "not to routinely declare all sites where the contamination is significant enough to warrant regulation". "I remain uncomfortable about this inconsistency," Professor Taylor told Fairfax Media. Real estate agents and a key environmentalist behind the creation of the state's land contamination laws said they were alarmed that residents throughout the state could be living unknowingly on top of dangerous chemicals. On Friday, authority chairman and chief...
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'Taxpayers sabotaged': Companies not paying tax despite receiving $6 billion in government contracts Sydney Morning Herald May 27 2017 - 12:24am Eryk Bagshaw   EXCLUSIVE  Multinational companies winning taxpayer-funded contracts worth hundreds of millions of dollars are not paying tax, a Fairfax Media investigation of Tax Office and tender data has revealed. Computer giant IBM, software company SAP and military arsenal provider Northrop Grumman are among those paying little or no tax in Australia, while scoring hundreds of government contracts. A Fairfax Media analysis of 20 of the largest tender-winning companies over the past decade has found taxpayers shelled out $6 billion for services ranging from tank maintenance to software. But those top 20 companies paid only a combined $42 million in tax in the last financial year, Tax Office data shows, meaning Australia may have missed out on as much as $264 million in tax if the companies paid the...
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RBA deputy Guy Debelle promises to liberate world's foreign exchange traders Australian Financial Review May 25 2017 6:04 PM Aaron Patrick   On Anzac Day 2015, Guy Debelle, an assistant governor at the Reserve Bank of Australia, was walking along Bondi Beach at dawn when he got a call from the New York Federal Reserve. Simon Potter, one of the most powerful figures in financial markets regulation, wanted to strategise with Debelle a global response to an unfolding scandal in foreign exchange trading, the sprawling and mostly unregulated market that influences almost every economy on earth. By the time he reached his home in the adjacent suburb of Bronte, Debelle had had three conversations with counterparts overseas. A week later they set up a taskforce that thrust Debelle into the heart of efforts to tame corruption that had shaken confidence in the world's biggest financial market. For the past two years...
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Banks should get out of wealth management The Australian 12:00am May 27, 2017 Alan Kohler   The banks have been internally investigating their wealth management businesses lately, inspecting individual advice files and trying to head off more PR problems. The whisper is that, on average, eight out of 10 files are “disastrous” — the advice inappropriate. Whether that is eventually confirmed officially, or it only turns out to be half of them, or the whole exercise is kept quiet, it’s clear that the big four banks’ wealth management acquisitions about 15 years ago were ruinous. It all seemed like such a good idea at the time: wealth management seemed like a splendid add-on to banking services and a way for the banks to maintain profit growth as the expansion in housing credit inevitably fell from the 20 per cent a year it reached in the early 2000s. “More products per customer”,...
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Can you think of a compelling reason why the big banks shouldn't be taxed more heavily? Key points: Bank levy expected to raise $6 billion Levy will apply only to CBA, Westpac, NAB, ANZ and Macquarie Bank Financial Ombudsman recorded a 34 per cent rise in general insurer disputes Two weeks on from the federal budget, the big banks are failing in their attempts to muster any sort of meaningful support for a campaign against the Government's $6 billion tax impost. With scandal after scandal, where innocent ordinary people have been badly hurt, the banks' reputations are mud. In recent times, the Commonwealth Bank's insurance arm, CommInsure, has been in the headlines for the heavy-handed way it has treated customers trying to make claims on their life insurance policies. Now CommInsure's general insurance division is showing the same mean spirit. In 2015, as a result of some of the worst storms in many...
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Small banks are also too-big-to-fail Australian Financial Review May 26 2017 10:25 AM Christopher Joye   If Australia's beloved banks were implicitly government guaranteed before the global financial crisis (aka "too-big-to-fail"), they are far more so today. You cannot minimise these guarantees given they cornerstone the entire financial system (nor pretend they don't exist). All the prudent policymaker can do is mitigate them via recognising the subsidies, pricing them, and minimising the probability they are called upon through, among other things, ensuring our banks retain world-class equity buffers. Before the GFC we never had an explicit government guarantee of deposits. We had never seen taxpayers insure the banks' wholesale bonds, as they did (and NAB's learnt chair Ken Henry says they will do again). We did not have a permanent bank bail-out fund via the Reserve Bank's globally unique Committed Liquidity Facility, which is designed to furnish banks with $200 billion...
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Bank levy makes guarantee explicit, may make APRA more hawkish Australian Financial ReviewMay 25 2017 11:00 PM James Frost   Fallout from the government's surprise tax grab continues to reverberate as some argue that the levy represents an explicit government guarantee, amid concerns the levy could see capital requirements racheted even higher. Treasurer Scott Morrison came close to acknowledging the implicit guarantee that the government would step in and save the big four and Macquarie in a crisis when he spoke of the "special position" the banks hold during question time on Wednesday. Former Future Fund managing director and newly appointed chairman of industry fund HESTA's investment committee, Mark Burgess, said the federal government's decision to raise a new tax on the five banks that benefit from the guarantee made it explicit. "The real story here is not only has the government introduced a tax but perhaps also that it has...
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WHO IS CHARLES PONZI? Who is the Aussie Ponzi?   Charles Ponzi (a Sicilian emigrant to America), started his financing scams re postage stamps in 1920's, after doing a bit of time for theft in Canada. The ambitious and personable Mr Ponzi, travelled to the US shortly after his release from jail aged 18, and later on ripped off a Banker, purchased the Bank and then turned his Bank in Boston into one giant swindling operation. Charles managed to swindle one third of the Boston Police Force by collecting their savings. Essentially, Ponzi stole large funds from one person to pay others small amounts of interest on their funds from monies previously stolen. The scam makes the retiree investors and shareholders believe their funds are safe. WORD OF MOUTH sees more and more people enter the PONZI and place their investment monies with the Banker. The word went around: Mr...
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DAMAGE TO THE ECONOMY. Caused by the LNP in 1996 I raised the issue of White Collar Crime burden on the Nation with PM John Howard via letters in 1999 re Managed Investment Scams whereby RETIREES were offered Ponzi Financing MIS and Agricultural investment that proved to be pure scamming activities. I asked that same question: How do we justify turning Retirees into Pensioners by permitting criminals to steal their nest eggs and profit from those frauds? Retirees were pouring into Centrelink after being told they have lost 100% of their life savings. How does the additional dependence on welfare assist the economy? Centrelink were telling older people they could NOT get the pension as they were still "deemed" as having the funds, which may return at some date in the next few years of dubious creditors meetings. I lobbied the Minister Vanstone re the Centrellnk issue. The following day Centrelink...
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Labor targets dodgy company directors with crackdown on phoenix schemes Sydney Morning Herald May 24 2017 - 12:15am Adam Gartrell   EXCLUSIVE  All Australian company directors would be assigned special ID numbers under a new Labor policy designed to prevent them deliberately tanking their companies to avoid paying workers, creditors and the Tax Office. The federal opposition is also promising tougher penalties for dodgy directors and stronger protections for employee entitlements under its plan for a crackdown on what is known as "phoenix activity". The scourge of corporate Australia, phoenix activity costs the economy billions of dollars a year, but little has been done to stamp it out. It occurs when a company collapses with a mountain of debts and then rises from the ashes – like the mythical bird – with the same assets and customers to avoid paying bills. Under Labor's new policy – to be announced by frontbenchers...
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