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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Shorten to hit banks with levy for $640m victims compo fund The Australian 12:00am February 25, 2019 Greg Brown   Bill Shorten is set to hit banks and financial institutions with a new levy for a $640 million fund to support victims of misconduct as Labor sharpens its attacks on poor corporate behaviour ahead of the expected May federal election. The opposition will today ­announce a “banking fairness fund” to be imposed in addition to the Coalition’s banking levy and be paid by financial institutions among Australia’s top 100 listed companies, with the amount they pay linked to their market capitalisation. The pre-election pledge would raise $160m in new taxes a year for four years, hitting not only the big four banks — Commonwealth, NAB, Westpac and ANZ — but also Suncorp Group, Bank of Queensland, and the Bendigo and Adelaide banks. ­Financial institutions AMP and Macquarie Group would also pay....
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Sluice Gate – money laundering and real estate shape as an election issue michaelwest.com.auFeb 25, 2019 Michael West, Nathan Lynch   “Most Aussies, especially first homebuyers, would be furious to learn they’re competing for houses with people who are trying to wash the proceeds of illicit drug sales, fraud or corruption,” writes financial crime expert Nathan Lynch. Yet incredibly – as global money laundering authorities are increasingly annoyed about Australia’s failure and dithering on compliance – real estate agents, lawyers and accountants still remain free from money laundering laws which were supposed to be introduced 12 years ago. In the story below, Lynch, a financial crime expert from Thomson Reuters, examines how the government has been making cuts to the Australian Federal Police and ASIC as Australia falls further behind the rest of the world on fighting financial crime. Two years ago, this website revealed how the Financial Action Task Force...
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  Super funds to halve: Macquarie The Australian 12:00am February 25, 2019 Scott Murdoch   The number of Australian superannuation funds has been predicted to halve and the larger cashed-up “mega” funds are likely become the driving force of corporate activity as they take larger direct investments in Australian com­panies. A new report by Macquarie, the top-ranked mergers and acquisition adviser, obtained by The Australian has showed that superannuation sector consolidation could be greater that initially predicted, following the Hayne royal commission. It said that in 2018 Australian superannuation funds managed $2.7 trillion and the value of the funds under management could shoot as high as $10.5 trillion by 2040. Macquarie said the result of the sector’s consolidation would be fewer but more cashed-up funds that would start to make greater direct equity investments. “Pension funds are managing record capital inflows, resulting in competitive pricing for core assets and a broadening...
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Smaller lenders call on APRA to close the big four funding gap The Australian 12:00am February 25, 2019 Joyce Moullakis   The customer-owned banking sector has urged its regulator to use new capital requirements to close the gap on a funding advantage held by the big four, while not allowing the proposals to flood the bond market with new issues. In a submission to the Australian Prudential Regulation Authority, the $116 billion customer-owned bank industry argues the “too big to fail” funding advantage should be addressed to help smaller lenders compete against the big banks. It also urges the regulator to ensure the new reforms don’t “flood the market” with subordinated debt securities, which would disrupt pricing for all banks in that part of the bond market. APRA’s proposed changes — outlined in November — would see banks boost their capital buffers by up to 5 percentage points to limit taxpayer...
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The Royal Commission was a sideshow compared to this Daily Reckoning AustraliaFebruary 23, 2019 Nick Hubble   The most important fallout from the Royal Commission began this week. Borrowers have launched a class action lawsuit against Westpac. They argue that Westpac’s usage of the so-called HEM (Household Expenditure Measure) is irresponsible lending. And that entitles the borrowers to hundreds of thousands in compensation each. This could cost Westpac ‘tens of millions of dollars’, according to the ABC. Now, I don’t know who is doing the maths here. The Sydney Morning Herald reported the following figures late in 2018: ‘For about 50,000 of those loans it received, but didn’t use, consumers’ actual expense information that was higher than the HEM and for a similar number of loans with an interest-only period it used the incorrect method of assessing the customers’ capacity to repay the loan at the end of the interest-only period.’...
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The Paladin Affair: Follow the money Australian Financial Review Feb 22, 2019 11.45pm Angus Grigg, Jonathan Shapiro, Lisa Murray   In the autumn of 2014, a group of former SAS soldiers gathered at a function centre in Devonport to farewell one of their own. Jerry Rouwhorst had died in London following a decorated military career and a high-octane life after the army in trouble spots like Baghdad and Kabul, before providing close protection for Ginia Rinehart, the daughter of Australia's richest woman. Rouwhorst would be farewelled that morning in a private ceremony on Tasmania's north coast, and among the mourners was his former business partner Craig Thrupp. The pair had worked closely together in Jakarta during the early years of security company Paladin, but had fallen out over money and the firm's direction around 2010. Rouwhorst would tell one friend two years later that Thrupp had "f---ed me over" and that...
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Opportunity and threat in post-Hayne world says Platinum's Andrew Clifford Australian Financial Review Feb 22, 2019 4.32pm Vesna Poljak   Platinum Asset Management chief executive Andrew Clifford says conflicts are so embedded in the Australian financial services industry, it is impossible to put a value on any funds potentially at risk under the clean regime he hopes lies ahead. The global equities manager has never paid a dollar in trailing commissions and reiterates that it is in a good position to adjust to a post-royal commission regulatory environment. But it has no way of knowing how the end investor arrives at a particular platform that happens to carry Platinum's managed funds. It is represented on all the main platforms. "When I look at it, I reduce the key message from the royal commission to one line really because some of the recommendations I would have hoped for are not there, but...
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'Irresponsible' agents blamed as top end property plunges by 40pc Australian Financial Review Feb 22, 2019 4.09pm Duncan Hughes   Prices for some prestigious properties have fallen by more than 40 per cent as vendors rein in their expectations in response to falling demand, tighter credit and lower prices. Buyers' agents, who represent property buyers, are blaming the reductions on the "irresponsible" and unrealistically high prices set by realtors desperate to win business from sellers. "These price cuts are a result of bad agency practice," said David Morrell, director of buyers' agency Morrell Koren. "Professionals should set realistic values that reflect where the market sits." Mr Morrell said such over-valuations were widespread and were partly driven by real estate agents trying to generate more revenue through advertising campaigns paid for by the vendor, which then generate commissions and other incentives from advertising companies. The higher the forecast price of a property...
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IMF says Australia must do more to prepare for next crisis The Australian 12:08pm February 22, 2019 Joyce Moullakis   The International Monetary Fund has called on Australia to better prepare for the risk of a banking crisis, including putting aside $20 billion to draw on in the event of a bank collapse or wider threat. The IMF praised Australia’s financial stability and policy in its 2018 Financial Sector Assessment Program report released yesterday. But it said “more needs to be done” to ensure authorities were prepared for a major bank collapse or crisis in the finance sector. “The $20bn standing budgetary appropriation for financial crisis management processes should be discussed by the CFR (Council of Financial Regulators) and be specified in the legal framework as soon as feasible,” the IMF said. The report also suggested the bank levy announced by the Federal government in the 2017-18 budget could be accrued...
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Westpac’s Bill Evans ‘gobsmacked’ by lending drop The Australian 12:00am February 23, 2019 David Rogers   As chief economist of Westpac, Bill Evans has a pretty good bead on the economy. But when he looked at the ­December housing finance data this month, he was shocked. New lending for housing had fallen almost 15 per cent since mid-year, confirming his growing sense of unease about a rapid slowdown in the economy after the end of a record housing boom that was spiked by slowing Chinese demand and a crackdown on risky lending. “I’ve been gobsmacked by the rate at which new lending has ­collapsed,” Mr Evans told The Weekend Australian. “That fall, coming on top of earlier falls, was very surprising.” The Australian dollar dived, bond yields fell and the sharemarket soared this week after the veteran economic forecaster said the Reserve Bank would be forced to cut interest rates in...
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Long-term debt pain starting to hit home The Australian 12:00am February 23, 2019 Roger Montgomery   The half-year reporting season on the ASX is well under way and a few themes are emerging that suggest the cautiousness with which we approached 2019 was not misplaced. Indeed, the reason for our caution may have only just begun. By way of background, Australian households have amassed a record level of debt to income, as many countries have, over the past 30 years. The reason is pretty straightforward — declining interest rates, three decades of declines. The difference is that Australia’s rate of increase in the debt-to-income measure has been much steeper. Elsewhere in the world, where the rental yields are more attractive, sophisticated corporate investors own more of the rental stock. Here in Australia, where the net yields are negative, the majority of the rental stock is owned by less sophisticated “households”. The...
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$2m compo fair for ‘worst loss’: Shorten The Australian 12:00am February 22, 2019 Simon Benson   EXCLUSIVE  Financial institutions could be forced to pay up to $2 million in punitive damages to customers who have been humiliated, stressed or inconvenienced by a bank’s behaviour under a supercharged compensation scheme that will form a key plank of Labor’s formal response to the banking royal commission. Bill Shorten will announce today the dramatic increase to the compensation scheme for non-financi­al loss claims by consumers, which are currently limited to just $5000. The cap on financial credit-based claims against banks by consumers would be $2m under the Australian Financial Complaints Authority, quadrupling the current $500,000. The maximum claims for small businesses who allege losses at the hands of bank misconduct would double to $1m. The scheme would be retrospective and would allow AFCA to hear unresolved claims back to ­January 1, 2008. The most...
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  • fightback
    fightback says #
    Labor's plan sounds good so far but the only proviso being the retrospective date of Jan1 2008. Many of our members pre date that.
  • fightback
    fightback says #
    Labor's plan sounds good so far but the only proviso being the retrospective date of Jan1 2008. Many of our members pre date that.
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'Hockey owes me': Former Helloworld manager dials in to put heat on envoy Australian Financial Review Feb 21, 2019 5.49pm Andrew Tillett   Scott Morrison is digging in behind Joe Hockey despite claims aired in Parliament that a wealthy Liberal Party donor and travel company boss secured a meeting at short notice between one of his executives and the Ambassador to the US because "Hockey owes me". The controversy over senior Liberals' links to the Helloworld travel company and its chief executive Andrew Burnes has deepened after a former company manager, Russell Carstensen, told the Senate's foreign affairs committee he was dispatched to Washington DC after Mr Hockey had expressed his "frustrations" to Mr Burnes about the embassy's "unprofessional" travel arrangements. Mr Carstensen said he later learnt Department of Foreign Affairs and Trade staff were "uncomfortable" he met with Mr Hockey, who is one of Helloworld's biggest shareholders, owning more than...
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Federal Government slammed for stacking Administrative Appeals Tribunal with 'Liberal mates' ABC News22 February 2019 Jade Macmillan   The Federal Government has defended its latest appointments to the Administrative Appeals Tribunal (AAT), amid accusations it has been stacked with "Liberal mates". Attorney-General Christian Porter announced 34 new appointments to the tribunal, including former Senate president Stephen Parry, who resigned from Parliament last year after confirming he was a dual citizen. He was appointed on a part-time basis along with former federal Liberal MP Robert Baldwin and former Nationals minister De-Anne Kelly. Former state Liberals MPs — Michael Sutherland and Joe Francis from Western Australia and Steven Griffiths from South Australia — were given full-time positions along with former federal Labor MP David Cox. Shadow Attorney-General Mark Dreyfus said the number of Coalition figures, including former staffers, was "extraordinary". "This Liberal Government seems to think that public positions are just theirs to...
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KPMG report to Home Affairs Department flagged risks with Paladin Australian Financial Review Feb 21, 2019 10.00pm Edmund Tadros, Lisa Murray, Angus Grigg, Jonathan Shapiro   Consulting giant KPMG raised concerns about the financial position of Paladin – the little-known company contracted for $423 million to provide services to refugees on Manus Island – in a report to the Department of Home Affairs, contradicting evidence given by senior officials this week. KPMG, which refused to comment on the contents of the report, is understood to have flagged risks around Paladin's financials in the assessment. During a Senate estimates hearing on Monday, Home Affairs officials said KPMG did not "identify any significant issues that were drawn to" the department's attention about Paladin. Paladin broke its silence on Thursday, denying it had any bad debts and insisting it did not make payments that are not linked to a service. A KPMG spokeswoman said...
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Inferior support beams led to cracking of Opal The Australian 12:00am February 22, 2019 Elias Visontay   Engineers investigating western Sydney’s Opal Tower have found key horizontal support beams built to an inferior, non-compliant strength were the chief cause among a slew of other deficiencies that triggered major cracking and two evacuations of the troubled building. Handing down their final ­report after almost two months of the multi-party investigation, engineers engaged by the government also slammed structural engineers who provided the ­detailed technical design for the building’s construction of the project for lacking transparency and accountability. Another significant error of the tower was the decision to only partially grout — a process to seal and fill the space between surfaces — between the support beams and panels, which raised the stress the already non-compliant support beams were forced to carry and resulted in the most ­visible damage at the site. The...
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The corporate regulator's 'litigate first' strategy faces a big hurdle Australian Financial Review Feb 21, 2019 11.00pm Michael Pelly   The corporate regulator faces big hurdles to its "litigate first" strategy because of a definition of dishonesty that has been rejected by the High Court and never used successfully in a prosecution. Australia Securities and Investments Commission deputy chairman Daniel Crennan revealed on Tuesday there were 25 active investigations flowing from case studies at the banking royal commission and the regulator was "less likely to engage in negotiated outcomes". ASIC has sought advice on a Hayne royal commission case from the Commonwealth Director of Public Prosecutions, which said Tuesday it expected an extra 25 briefs, some involving multiple defendants, over the next two years. But leading corporate lawyers said there needed to be a reality check on how far ASIC could respond to Commissioner Kenneth Hayne's challenge that it should take...
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APRA to pursue super referrals The Australian 12:00am February 22, 2019 Michael Roddan   The prudential regulator will pursue 12 referrals of misconduct in the $2.8 trillion superannuation industry from Kenneth Hayne’s royal commission although there is no likelihood of civil or criminal penalties, as any potential guilty findings will allow the watchdog to use its ­directions power to overhaul rogue super funds. The Morrison government last week attached civil penalties to superannuation trustee breaches of directors’ covenants or obligations. However, it was not extended retrospectively, as Labor has proposed, amid concerns from Treasury that doing so would be a breach of human rights. The legislation also failed to be passed by the House of Representatives this week, so will now be unlikely to pass into law until April. While court action will not result in penalties, an adverse finding for a super fund could allow the Australian Prudential Regulation Authority...
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  Don't blame us for falling house prices says APRA chairman Wayne Byres Australian Financial Review Feb 21, 2019 1.59pm James Eyers   The prudential regulator's intervention to cool bank lending to property investors is not to blame for steep house price declines, the Australian Prudential Regulation Authority chairman said. Wayne Byres told Senate estimates on Thursday that the falls were "probably inevitable...after such a sharp run up" and that he had not been surprised by the extent of them even though APRA hadn't modelled the impact its policy would have on prices. Such a task would be better conducted by Treasury, he said, but would have been very difficult given there are many drivers of prices. Housing prices have fallen by 12 per cent in Sydney and by 9 per cent in Melbourne from their peaks in 2017. After rising by almost 50 per cent over the five years to...
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Cheap money 'bubbles' at risk of bursting Australian Financial Review Feb 21, 2019 2.48pm Sarah Turner   Cheap money has pushed companies such as US co-working space provider WeWork and ride-sharing firm Uber into bubble territory, but the conditions that fuelled their ascent are now reversing. That's the view of Chris Watling of Longview Economics. "WeWork should not be worth $US20 billion, Uber should not be worth $US120 billion. Tesla is a company that would not exist in the 1980s [when] there were proper bond vigilantes," he told the Portfolio Construction Forum markets summit 2019 in Sydney this week. "That is a bubble and I think that is starting to unwind," Mr Watling said. "You have to keep valuing things up or it doesn't work." A "trifecta of factors in the last few decades" has led to "serial bubble blowing", he added. Those factors include an unanchored international monetary system, central...
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