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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ASIC eyes banks for ‘predatory’ policy sales The Australian 12:00am March 7, 2018 Michael Roddan   The corporate watchdog has revealed it is investigating the banking sector over its sale of predatory insurance for personal loans, after the sector failed to expand its add-on insurance reforms beyond credit card products. Appearing before a Productivity Commission hearing in Melbourne yesterday for its review of competition in the financial system, Australian Securities & Investments Commission head of insurance and credit Michael Saadat said the banking sector had more work to do to shore up its controversial consumer credit insurance businesses. In its revamped code of practice, the Australian Bankers’ Association has pledged to introduce a cooling-off period before tellers and salespeople could sell add-on insurance products with credit cards, which covers consumers if they get sick or lose their jobs. An investigation by ASIC found many consumers were not aware they had been...
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CBA traders ‘had co-ordinated approach to BBSW exposure’ The Australian 12:00am March 6, 2018 Ben Butler   Traders at the treasury and markets divisions of Australia’s biggest lender, Commonwealth Bank, agreed on a “co-ordinated ­approach” to managing exposure to the benchmark bank bill swap rate, according to Federal Court documents. An email recording the agreement between the two parts of the bank is contained in documents filed with the court by the corporate regulator, which is pursuing CBA for allegedly rigging or ­attempting to rig the BBSW six times in 2012. A schedule of particulars, filed by the Australian Securities & Investments Commission late on Friday afternoon and made available ­yesterday, also includes excerpts of ­conversations between CBA traders discussing whether they wanted the rate to set high or low. A CBA spokesman said the bank “disputes the allegations made by ASIC as we do not believe our employees have engaged...
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Banking royal commission: National Australia Bank probing its mortgage introducer program The Australian 12:00am March 6, 2018 Richard Gluyas   National Australia Bank has started further disciplinary investigations into its mortgage introducer program that is set to be examined by the financial services royal commission, according to the ­Finance Sector Union. The FSU yesterday applied to represent members before the royal commission in relation to the NAB program and a further case study involving add-on insurance products sold by Commonwealth Bank for home loans, personal loans and credit cards. The hearings will begin next Tuesday, lasting until March 23. NAB’s review of its continuing introducer program, which rewards businesses for lending ­referrals to the bank, originally identified about 2300 home loans since 2013 that may have been submitted without accurate customer information or documentation. About 20 employees were sacked and 35 were disciplined. The FSU said none of the affected employees...
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Financial advisers will be under scrutiny and some are fleeing big firms as a result The New Daily10:45pm, Mar 5, 2018 Rod Myer   The prospect of coming under the glare of the royal commission appears to be sending a shudder through the advisory sector, particularly among the major financial houses. Research from Bell Potter reported by Independent Financial Advisors, a trade press publication, found that AMP, ANZ, Commonwealth Bank, IOOF, NAB and Westpac had lost a cumulative total of 87 advisers during February. For the year to February, Bell Potter found that the big five finance houses lost a total of 804 for the last year, Bell Potter analyst financial services Lafitani Sotiriou said in an email to subscribers. “AMP was particularly bad, notching its second worst month in the last year at -46 in February, which given the company is spending ~$80 million a year buying advisers and advisers’...
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Wealth next in firing line as Royal Commission sets cracking pace The Australian 11:58am March 5, 2018 Richard Gluyas   The Hayne royal commission’s first round of public hearings starts on Tuesday next week but the game has already moved on. The word on the street is that the commission’s dreaded notices to produce documents have started to fall like autumn leaves on the nation’s wealth and superannuation businesses. If consumer lending is the focus of the March 13-23 hearings, it looks like wealth is next in the firing line. There are early indications that a second round of hearings has been slotted in for April. Hayne, assisted by senior counsel assisting Rowena Orr and Michael Hodge, has set a cracking early pace, as exhausted legal teams struggle to keep up with the ceaseless churn of documents retrieved from the major banks’ vast data bases. One bank has already ripped through...
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AUSTRALIAN BANKS SELLING INTEREST ONLY LOANS TO 80% OF LOAN BOOKS ITS CALLED ASSET-STRIPPING.  Stripping older people of their own homes where five years before they had no debt.  Most of these people are on low incomes.  The paucity of truthful data is a key part of any PONZI financing racket. We know from speaking with Broker agents of banks and bank officers and managers across Australia, that the main product being promoted by Major Banks for well over a decade is INTEREST ONLY LOANS. Sellers tell me they sell very few full docs.   IO LOANS therefore are likely to be a corresponding  80% of loan books as that is the main product being SOLD.   APRA is receiving without question, FAKE STATS.  Loan Books – residential INV stand at $1.9 Trillion – other reports suggest $1.6Trillion.  80% of that figure is not $569 billion.  Martin North needs to ask APRA to release...
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Problem IO Loans Close To Home – The $100 Billion Problem Digital Finance Analytics (Blog)4 March 2018 Martin North  Sellers of mortgages tell us they are encouraged to sell INTEREST ONLY loans and sell around 8O%.  Martin North needs to question APRA, that its suggestion of a 40% problem is ridiculous as banks managers and broker agents of the bank explain across Australia, the amount SOLD per year is $167 million and therefore 80% of $1.9 Trillion loan book – well you do the math…………………….Sellers telling the truth but yes the Banks are the liars!!!  APRA being fed FAKE STATS by the Banks   [Click headline to view video presentation.} Today we discuss which post codes will be most impacted by the interest only mortgage loan reset issue, and update our estimates of the number and value of loans likely to be impacted. This received media coverage in the AFR and the Australian over the...
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Hayne inquiry could find issues are 'systemic' Australian Financial ReviewMar 4 2018 11:00 PM Sally Patten   Two weeks of hearings kick off on Tuesday week in which the financial services royal commission will start to probe misconduct by the banks. The hearings will focus on credit products such as mortgages, car finance and credit cards and "the arrangements and practices of banking and financial services providers and their intermediaries". The poor conduct, as far as we know, includes fraudulent home loan applications at National Australia Bank and Aussie Home Loans, which is owned by Commonwealth Bank of Australia, car financing deals by Westpac and ANZ Banking Group, unsuitable credit card limit increases at Westpac, credit card fees at Citi, add-on insurance products sold by CBA and unsuitable overdrafts and administration problems at both ANZ and CBA. It appears that much of the time will be spent re-examining disputes that have...
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Australia loaded up on debt but peak has passed: OECD The Australian 10:53pm March 4, 2018 David Uren   Australian governments have added more to their debt over the past five years than almost any other advanced country, but market analysts say the borrowing peak has passed. The OECD’s annual review of sovereign borrowing shows that new debt contracted by federal and state governments since 2012 has been equal to 12 per cent of GDP. The only advanced countries to have raised more in that period are Spain, Slovenia and ­Latvia. The OECD warns that countries should be using the current economic strength to improve their debt position. “Public finances need to be managed prudently during more favourable times to ensure that there is sufficient room for fiscal manoeuvre when needed, without putting public finances on an unsustainable path,’’ it said. “This is particularly relevant given the rise in the stock...
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Housing risks 'catastrophic': Grattan Institute Sydney Morning Herald 4 March 2018 — 7:55pm Peter Martin   Australia’s eight-year house price boom has savaged the living standards of poorer Australians while so far leaving the wealthy untouched, a new Grattan Institute analysis finds. But the report, to be released on Monday, warns of a “catastrophic” impact on all income groups should mortgage rates rise by more than a few percentage points. The institute’s chief executive, John Daley, said Australians who already owned their houses had been little affected by soaring prices to date because they had been “hedged”. If they moved, they could buy again for about the price they got when they sold. Property investors had done well out of the explosion in Sydney and Melbourne prices because they had always been planning to sell. But new buyers had been locked out. Home ownership had plummeted among Australians aged 25 to...
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Labor vows to step up assault on the wealthy who are rorting the system Australian Financial Review Mar 4 2018 11:45 PM Phillip Coorey   Shadow treasurer Chris Bowen will pave the way for more policies targeting the wealthy and possibly paring back legislated company tax cuts in a speech in which he will badge Labor's approach as "Hawke-Keating refurbished". In a scene-setting address to Per Capita to be delivered today, Mr Bowen says Labor will build on its announced plans to curb negative gearing, halve capital gains tax exemptions for investors, increase the top rate of income tax, and change the tax treatment of trusts. He said the medium-term assumptions that have the budget staying in surplus beyond 2020-21 are "crude" and, to shore up the nation's finances, Labor will target the structural deficits left over from the days of the Howard government. But only those that apply to the...
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CBA, Westpac cut rates but 220,000 interest-only loans face $100b crunch Australian Financial Review Mar 2 2018 5:45 PM Duncan Hughes   Commonwealth Bank of Australia and Westpac, the nation's two largest lenders, have announced cuts across its fixed rate interest-only loans of up to 50 basis points. CBA also cut fixed rates on fixed rate principal and interest loans and increased rates by up to 20basis points on some principal and interest products. While the cuts will give some borrowers relief, across the banking sector more than 220,000 interest-only property fixed term loans totalling upwards of $100 billion could face a credit crunch as their loans come up for renewal over the next five years, analysis of lending reveals. That's more than one-in-seven current interest-only loans measured by volume and about one-in-six by value, it shows. Some investment property borrowers could face big hikes in repayments as they transition to...
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Banking royal commission: Hayne’s world of banking pain The Australian 12:00am March 3, 2018 Richard Gluyas   Black humour abounds in the ­office towers of Melbourne and Sydney, as the relentless royal commission machine piloted by Ken Hayne chews into the daily routines and sleep patterns of countless lawyers and bankers. On hearing a rival legal team had stayed back the previous night until almost 4am, a senior banker deadpans: “So you’re ­telling me they had an early night, right?” Like a casino, the 24/7 micro-economy spawned by the financial services royal commission has its own artificial time zone where the lights are always on. Canteens operate through the night, with UberEats on standby as highly priced legal talent sweats on the arrival of another “Friday afternoon special” — a notice from the commission to electronically transmit all documents on a ­specified topic within 48 hours. Weekend plans are quickly ­discarded...
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  Hayne rejects CBA bid to keep evidence secret Australian Financial Review Mar 2 2018 9:13 PM James Frost   Commissioner Kenneth Hayne is poised to reject a series of requests from the banks to keep statements and other submissions made to the financial services royal commission secret. Late on Friday afternoon the Commissioner said that following a request from Commonwealth Bank to keep all or a part of a draft statement confidential, the commissioner had agreed to not publish the name of the customer or the number of the insurance policy. It is just the first in a series of directions the Hayne royal commission is expected to make following requests from the banks to keep details of its submissions out of the public eye. The statement in question is a draft statement written by the bank's executive general manager of retail products Clive Richard van Horen and is believed...
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APRA relaxing as home price boom ends The Australian 12:00am March 2, 2018 Michael Roddan   The banking regulator has acknowledged the housing boom may be drawing to a close, revealing its strict limits on the rate of lending to investors are “potentially becoming redundant” as the property market cools. The comments come amid signs banks are preparing to ramp up lending to housing investors again, mostly by winding back interest costs, bringing them closer to owner-occupied mortgage rates. Appearing before a Senate estimates hearing, Australian Prudential Regulation Authority chairman Wayne Byres said the need to maintain a 10 per cent annual growth limit on investor lending was reducing. “At the aggregate level, demand seems to have subsidised,” Mr Byres told senators yesterday. “So the general dynamics in the market suggest is it potentially becoming redundant, although there are some institutions still growing quite quickly.” Statistics this week showed the growth...
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A focus on responsible lending will uncover huge problems for the banks ABC News1 March 2018 6:54pm Phillip Lasker business reporter   Investment guru Warren Buffet wasn't commenting on the Australian mortgage market when he said, "Only when the tide goes out do you discover who has been swimming naked", but it is no less relevant. When interest rates start rising and/or if property prices fall, the market's vulnerabilities will be exposed. The prospect of higher interest rates is considered a distant threat because inflationary pressures will take time to build. We also know households are sitting on a mountain of property debt and one false interest rate move by the RBA could trigger a collapse with far-reaching consequences. That isn't the only trigger. Overstated income The banks' Achilles heel — irresponsible lending — is shaping up as a major threat to the banks and financial system, depending on the outcome...
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Bankers’ charm offensive starts with a lick of paint — and a name change Herald Sun March 1, 2018 8:16pm Jeff Whalley   THE lobby group for the big Aussie banks has dropped the word “bankers” from its title, arguing the change better ­reflects its work. It comes as the ­industry tries desperately to charm the public following a string of disastrous scandals. Formerly the Australian Bankers’ Association, the lobby group on Thursday circulated correspondence with a new name. It is now calling itself the Australian Banking Association — keeping the ABA acronym that it has long used. A spokesman for the lobby group told the Herald Sun on Thursday that the changes took effect last week.  “The name change better reflects the work of the association, which is primarily ­focused on banking — how it’s conducted, how it’s regulated, how it contributes to the Australian economy and how it can...
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The Australian companies you didn’t know were owned by the big four banks The New Daily11:00pm, Mar 1, 2018 James Fernyhough   Everyone knows Australia’s big four banks are huge, accounting as they do for almost one quarter of the value of all the companies on the entire ASX. But they are actually even bigger than they seem, thanks to a network of other brands and subsidiaries that often carry no obvious sign that they belong to a big bank. This is part of a controversial practice known as ‘vertical integration’, which sees single companies controlling several links in the supply chain. It’s a practice fraught with potential conflicts of interest, and the big banks absolutely love it. This week The New Daily revealed a prime example of vertical integration – NAB’s deal with realestate.com.au to sell ‘white labelled’ (ie disguised) home loans through the property website. But there are many,...
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Productivity Commission and banks at loggerheads on competition Australian Financial ReviewMar 1 2018 6:47 PM James Eyers   The widening spread between the Reserve Bank's official cash rate and interest rates paid by borrowers since the GFC provides evidence that price competition is lacking in banking, Productivity Commission chairman Peter Harris told two major banks, as their smaller rivals pleaded for changes to regulatory capital levels and a stronger role for the competition regulator to help level the playing field. But during a second day of public hearings in Sydney, National Australia Bank chief operating officer Antony Cahill described competition as "truly intense" and said this was reflected in falling level of return on equity and net interest margins over the past 15 years. He said competition must be balanced against stability, and while competition could be defined, as the PC suggested, as a market where customers benefit from "high quality...
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Banking royal commission: financial tsars kept in the dark before inquiry called The Australian 6:36am March 1, 2018 Michael Roddan   Treasury did not consult any member of the Council of Financial Regulators before the Turnbull government announced a royal commission into the banking and financial services sectors. Treasury deputy secretary John Lonsdale revealed during a Senate estimates hearing on Wednesday the department provided advice and a draft terms of reference for a potential royal commission to Scott Morrison two days before the Treasurer announced the inquiry in late November. Mr Lonsdale said the Australian Prudential Regulation Authority, the Reserve Bank of Australia and the Australian Securities & Investments Commission were not consulted on the draft terms of reference prior to Mr Morrison’s announcement. The Turnbull government has said the royal commission was triggered by the chief executives and chairmen of the four major banks — Commonwealth Bank, Westpac, National Australia...
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