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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Shadow banks two-and-a-half times more likely to approve loans than big four Australian Financial Review07 Dec 2018 5:40 PM Duncan Hughes   Mortgage borrowers are two-and-a-half times more likely to have a home loan approved by a regulation-lite shadow bank than a big four competitor, analysis reveals. A yawning gap between the sectors has been widening since February when the banking royal commission put the spotlight on authorised deposit-taking institution (ADI) lending practices, particularly for the big four lenders. But shadow, or non-banks have been gaining market share since early 2016 when macro-prudential controls imposed by regulators targeted lending standards in a successful bid to ease pressure during the property boom. Two sets of data – commissioned by AFR Weekend – reveal how shadow banks have been eroding ADI market share with more competitive products and higher numbers of loan approvals. "Shadow banks have had lighter regulation and the more favourable...
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Investors want IOOF cleanout after APRA's shock move Australian Financial Review07 Dec 2018 10:31 PM Misa Han   Investors are calling for the IOOF board and management to go after an emboldened prudential regulator took the wealth giant to court for allegedly breaking superannuation laws. The shock move, just months after the Australian Prudential Regulation Authority was lambasted for failing to police the superannuation sector at the Hayne royal commission, saw IOOF shares plunge by more than a third and left its deal to take over ANZ's wealth arm hanging by a thread. Three years after it first raised the alarm with IOOF over widespread conflicts of interest, the Australian Prudential Regulation Authority has asked the Federal Court to disqualify the group's chief executive Chris Kelaher, chairman George Venardos and three senior executives from sitting on super fund boards. Fund manager Reece Birtles, who manages money for IOOF's major shareholder Legg...
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Bubble boys: Who's in Scott Morrison's inner circle? Australian Financial Review 07 Dec 2018 11:00 PM Andrew Tillett   When Malcolm Turnbull began trying to torpedo Scott Morrison's efforts to save Craig Kelly's preselection this week, the Prime Minister turned to a man who had been a confidant to both the current and former leaders for help. Scott Briggs' only official position in the Liberal Party hierarchy is the president of Morrison's local Federal Electorate Council for his seat of Cook but when Briggs calls, people know he's speaking for the PM and on Sunday and Monday, he hit the phones. While Morrison is known to have called at least one member of the NSW Liberal Party State Executive, Sally Betts (a Waverley councillor close to Turnbull) to prevail upon on her to let Kelly survive, Briggs repeatedly spoke to executive members to ensure Morrison's position carried the day. One NSW...
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Conflict of Ethics: the banks and the Ethics Centre michaelwest.com.au Dec 8, 2018 Michael West   Chasing the murky money trail for the payments made by Australia’s banks as punishment for their systemic fraud, Michael West finds some of the money has found a home at The Ethics Centre, in ethics programs for the banks. Who knew? The Ethics Centre has long decried “bank bashing”. Nor has its executive director, Simon Longstaff, seen the need for a royal commission into the banks, contending the powers of the corporate regulators were already enough to curb their foibles. “The community doesn’t see the extraordinary diligence with which the regulators go about their work,” wrote Longstaff in a piece published in Fairfax Media last year. “This is as it should be. Except in cases of criminality, it is often better to work quietly to identify and fix problems rather than splash them across the news. There’s little virtue...
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Banks and other big companies face billions in fines under Labor plan Australian Financial Review06 Dec 2018 7:48 PM John Kehoe   Banks and other big companies would face unprecedented fines of billions of dollars rather than a capped $210 million for civil offences, under changes that Labor wants to make to a federal bill. Big business is alarmed that Labor's eleventh hour proposal would drive up their insurance costs even if they never cop a fine or do nothing wrong. Business Council of Australia chief executive Jennifer Westacott said Labor's arbitrary increase in penalties for corporate offences was an "unnecessary regulatory overreach" and appeared to be "political expediency". "There has not been any time for a thorough examination of the consequences of these sudden changes, for example the possible impacts on insurance and funding costs and the flow through effects on prices," Ms Westacott said. Abolishing the government's proposed $210...
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Macquarie Bank set to shake up residential mortgage market Australian Financial Review 06 Dec 2018 5:15 PM Duncan Hughes   Macquarie Bank is set stop underwriting new "home-branded" loans for several household name lenders and focus on its own products. It comes as the industry grapples with falling property sales and revenues, intense scrutiny from the prudential regulators and the prospect of sweeping recommendations by the banking royal commission intended to improve competition and boost transparency. Macquarie is blaming the technological and operational complexity of its so-called "white label" operations and the likely regulatory fallout from increased scrutiny of competition and remuneration. The move will trigger strategic realignments throughout the industry as former competitors move to fill a void that will filter through product manufacturing, distribution and product choice. It could also shake up several key relationships between lenders and mortgage brokers, who act as intermediaries between property buyers and lenders,...
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Credit risks ‘real and rising’, says UBS The Australian 12:02pm December 6, 2018 Samantha Bailey   The current credit squeeze could deteriorate into a full credit crunch if banking royal commission recommendations result in reduced borrowing capacity, further restricting the flow of lending and credit growth, UBS analysts say. In a note to clients predicting the impact of possible Hayne royal commission recommendations, UBS analysts led by Jonathan Mott said they remained very cautious on the banks, as fundamentals on the sector continue to deteriorate. “The banking sector is facing a period of substantial and sustained earnings pressure which is likely to last several years,” UBS analysts said. “The risk of the current credit squeeze turning into a credit crunch is real and rising, with the housing market now falling sharply.” Their recommendations come ahead of the release of commissioner Kenneth Hayne’s final report, which is due out by February 1....
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RBA in 'uncharted territory' on falling house prices says deputy governor Guy Debelle Australian Financial Review 07 Dec 2018 1:46 AM Matthew Cranston   The Reserve Bank is in "uncharted territory" when responding to falling house prices and can only wait and see what happens to weaker consumption over the next few months to get a clearer view on economic growth according to deputy governor Guy Debelle. Dr Debelle told economists at the annual Australian Business Economists dinner on Thursday night that the situation of falling house prices was "absolutely something we are paying attention to" both from the lending perspective and with a view to the impact on the economy. "From what I can tell what we haven't seen anywhere in the world is a decent fall in house prices in two capital cities at the same time unemployment is going down and the economy is growing at a reasonable...
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Stanford professor Anat Admati slams local banks, labels APRA reforms ‘outrageously inadequate’ The Australian 2:38pm December 5, 2018 Adam Creighton   A top international finance expert has slammed the banking regulator’s prudential reforms as “outrageously inadequate”, suggesting the post-crisis reforms, part of a global rollout, have done little to make banking safer or more ethical. Anat Admati, Professor of Finance at Stanford University, said the misconduct uncovered in the royal commission was common place in banking around the world. “The financial sector is particularly prone to these problems because it’s easy to confuse people, it’s easy to hide harms that we can’t see physically,” she said. “You in Australia have four big banks, with little competition, that are too big to fail, and which fund themselves abroad in very fragile way,” she added, speaking to Your Money today. Australia, she said, had avoided the worst of the financial crisis but was...
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Banks receive top gripes at new complaints authority after royal commission Australian Financial Review 05 Dec 2018 6:08 PM Elouise Fowler   Disgruntled bank customers submitted more than a third of complaints to the new Australian Financial Complaints Authority in its first month of operation after it was set up by the federal government in response to revelations of poor treatment of customers across the banking, finance, insurance and superannuation sectors. Every day more than 300 aggrieved customers and small business owners lodge complaints to the new body, which superseded the Financial Ombudsman Service (FOS), Credit and Investment Ombudsman (CIO) and Superannuation Complaints Tribunal, and is designed to assist customers by streamlining the complaints system and dispute resolution. The month-old organisation, which opened on November 1, has received received 6522 complaints to date, with 2367 complaints aimed at banks. "We suspect, anecdotally, that AFCA is seeing some impact from the royal...
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  NAB haunted by foreign exchange woes more than a decade after trading scandal Australian Financial Review 04 Dec 2018 11:00 PM James Frost   An independent review of NAB's foreign exchange systems conducted in April was unable to assess whether the bank could prevent, detect or respond to employee misconduct, such as front-running orders or insider trading, almost 18 months after it agreed to stamp out such practices. The findings are contained in a report by consultancy group Promontory dated April 18, 2018 and were an agreed step from an enforceable undertaking (EU) or negotiated outcome reached between the Australian Securities and Investments Commission (ASIC) and NAB in December 2016. Published by the Hayne royal commission last week, the report finds the bank's promises to fix problems within its foreign exchange department were not followed through with one-third of the criteria "partially complete", one-third "mostly incomplete" and one-third "unable to...
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Australian economy posts the weakest quarterly gain in two years Australian Financial Review 05 Dec 2018 3:33 PM John Kehoe   Australia's economic growth slowed to 0.3 per cent in the September quarter, its weakest pace in two years, as a sharp fall in mining investment and slowdown in consumer spending dragged on the economy. The annual economic expansion through the year was a slightly lower-than-trend 2.8 per cent, below the downwardly revised 3.1 per cent in the year to June 30. Market economists had forecast September quarterly growth of 0.6 per cent and annual growth of 3.3 per cent. The Australian dollar fell more than half a cent on the news to below US73¢. Commonwealth Bank of Australia economist Gareth Aird said the result was "underwhelming". "It was clearly a weak September quarter from an output perspective," he said in a research note. "But it's been a solid few years...
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Reserve Bank of Australia keeps cash rate on hold at 1.5pc Australian Financial Review 04 Dec 2018 4:42 PM William McInnes, Tim Boyd   The Reserve Bank of Australia extended its record-breaking run of inaction on rates, keeping the official cash rate on hold for a 28th consecutive month ahead of data due on Wednesday that is expected to show the economy growing at an above-trend pace for another quarter. Following its final meeting until February 2019, the Reserve Bank kept the official cash rate at 1.5 per cent and maintained a positive stance on the labour market, citing a pick-up in wages growth last month. However, it cooled its language around trade noting "some signs of a slowdown" and declines in commodity prices. "With the economy expected to continue to grow above trend, a further reduction in the unemployment rate is likely," governor Philip Lowe said in his statement. "The...
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Falling house prices may trigger spending strike Australian Financial Review 05 Dec 2018 4:41 PM James Frost   Global credit ratings agency Moody's has warned of the potential for falling house prices to weigh on consumption habits, kicking off a vicious cycle of further weakness in the housing market and the broader economy. Analysts Daniel Yu and Patrick Winsbury warn that a prolonged weakening of house prices would deliver a negative wealth effect where home owners, discouraged by lower house prices, put off spending, creating the risk of "material spillover effects on the broader economy". The risk assessment has arrived on the back of national GDP data that showed Australia's economic growth in the September quarter slowed to 0.3 per cent or the weakest in two years. Moody's expects residential mortgage delinquencies to increase in 2019, albeit from a low base, citing a lack of wages growth and higher interest rates,...
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Property market falls tipped to dwarf 90s recession Sydney Morning Herald 3 December 2018 6:00pm Jessica Irvine   Sydney's property downturn is set to eclipse that of the early 1990s recession – and it's likely to claim that record before Christmas. Sydney prices slumped 1.4 per cent last month, according to CoreLogic figures released on Monday, marking an acceleration in the pace of price falls from recent months. This brings cumulative losses since the peak of Sydney’s property boom in July last year to 9.5 per cent – within a whisker of the 9.6 percent drop in values between 1989 and 1991. Melbourne homes also lost 1 per cent in value, bringing total losses to 5.8 per cent since its peak in November last year. As the Reserve Bank of Australia board meets on Tuesday to consider interest rates for the last time this year, economists are tipping the property downturn...
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Deutsche: Australian property to crash like Ireland Macro Business6:59 am December 4, 2018 David Llewellyn-Smith   Via Deutsche’s new banking analyst Matthew Wilson: At best, mortgage growth will continue to slow as deleveraging works its way through the economy constraining house prices and discretionary spend, but it’s unlikely to be beautiful. At worst, we confront the Irish-like scenario. However, we think it’s unlikely to reach the Irish heights of 25 per cent housing NPLs for a decade due to a more independent policy infrastructure. However, a zombie-like mortgage book is possible. It is not politically palatable nor logistically easy to foreclose on vast amounts of troubled mortgages. Capital therefore may not be immediately available to deploy into productive recovery credit. Wilson slashed his 2021 bank earnings outlook by 40% for CBA and WBC owing to their much heavier mortgage exposure: Prima facie, the outcome today appears to be – unbalanced business...
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House prices crash by 50 per cent, RBA launches $300 billion bank rescue in ‘outrageous’ forecast news.com.au December 4, 2018 Frank Chung   House prices collapse, Australia plunges into recession and a $300b bailout is needed to save the banks. Here’s how it could happen. The Reserve Bank could be forced to step in with a $300 billion bailout program to rescue Australia’s banks if the housing credit crunch accelerates into a “doom loop” that causes property prices crash by 50 per cent, plunging the country into recession. That’s according to Saxo Bank’s latest “Outrageous Predictions” report, which outlines a series of “unlikely but underappreciated events” that could send shockwaves across financial markets if they were to occur. “This is not an official forecast, it’s an outrageous forecast that could happen if certain factors were to fall into line, but something we put maybe a 1 per cent probability on,” said...
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Sorry First Homebuyers, But Falling House Prices Won't Help You Much 10 dailyMon 03 Dec 2018 5.40 PM Josh Butler   Economists are warning of the biggest housing price falls since the GFC, but first homebuyers will be waiting a lot longer before affordability improves by any decent measure. That's the message from experts, who said the small declines in housing prices are still dwarfed by the enormous price spikes of recent years in capital cities. The latest data from property analysts CoreLogic points to a 0.7 percent fall in national housing prices in November. Of most concern is a one percent drop in Melbourne and a 1.4 percent dip in Sydney, coming after several months of smaller price decreases. "We've recently seen small and steady declines but this month nationally, the 0.7 percent fall is the biggest monthly since November 2008, which was late in the global financial crisis," Cameron...
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ANZ admits to HEM abuse in mortgage approvals Macro Business 12:40 pm December 3, 2018 Leith van Onselen   Appearing before the banking royal commission in its seventh and final round of hearings, ANZ CEO, Shayne Elliott, admitted to being a serial abuser of the Household Expenditure Measure (HEM) – a relative poverty measure – in lieu of a comprehensive credit assessment, but also vowed to significantly wind-back its use to a third of overall mortgage applications. From The Adviser: In round one of the commission’s hearings, ANZ general manager of home loans and retail lending practices William Ranken admitted that the bank did not further investigate a borrower’s capacity to service a broker-originated mortgage… Counsel assisting the commission Rowena Orr QC pointed to a review of ANZ’s HEM use by consultancy firm KPMG upon the Australian Prudential Regulation Authority’s (APRA) request. The KPMG review found that 73 per cent of...
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Investigation: how the government is “punishing” bank crimes with tax breaks michaelwest.com.au Nov 30, 2018 Michael West   Are the victims of bank crime to blame for not being educated? Michael West investigates where the money has gone from corporate law enforcement and discovers the banks have been getting tax deductions. Picture this: a gang of robbers breaks into your house and helps themselves to your possessions. The police catch the robbers. But instead of charging them with theft, or even “break-and-enter”, they offer them the opportunity to make a donation to charity and claim a tax deduction. The donation is to be a fraction of the amount the robbers have earned over the years from ransacking peoples’ houses and – as part of the enforcement action by authorities – the robbers can nominate their favourite charity for the donation. This donation is to be called a Community Benefit Payment. The...
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