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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Banking royal commission: AMP boss agrees group may face fresh fee scandal as compensation costs blow out The Australian 3:21pm November 27, 2018 Joyce Moullakis   AMP’s acting chief Mike Wilkins has admitted to a blow out in costs to $778 million in its embattled advice business, to pay back customers and account for lost earnings, as the group seeks to rectify poor advice and charging fees for no service. In often damning statements, Mr Wilkins said, however, that AMP is yet to agree key points on repaying customers with the corporate regulator which is holding the program up. He added that there were two outstanding issues being debated with the Australian Securities and Investments Commission. Documents tendered to the royal commission showed that under a base case or worst case plan it would take AMP nine years to repay customers that received poor advice or fees for no service. AMP...
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Margin Call: ANZ boss Shayne Elliott turns in stellar banking royal commission performance The Australian 4:29pm November 28, 2018 Will Glasgow, Christine Lacy   ANZ boss Shayne Elliott is the David Bowie of Big Four banking: continually reinventing himself, forever channelling the zeitgeist. Today, at Kenneth Hayne’s royal commission in Melbourne, the banker gave the performance of his career. Dressed in a sombre black suit, there was none of NAB boss Andrew Thorburn’s flashiness or NAB chairman Ken Henry’s superciliousness. The 54-year-old Elliott was calm, respectful and — above all — contrite, just as his advisers and chairman David Gonski had wanted. “It’s wrong,” Elliott told counsel assisting Rowena Orr numerous times of a host of imperfect behaviour in the bank’s recent history. Follow banking royal commission developments via our live blog “I totally understand your perspective,” Elliott was only too happy to concede to Orr. It was hard to believe...
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A flippant Ken Henry could prove a liability at NAB The Australian 11:00pm November 27, 2018 Ben Butler   Ken Henry’s failure yesterday to meet the simple test set for him by the royal commission raises the question how much longer he can continue as chairman of NAB. All that counsel assisting, Rowena Orr, QC, wanted — all that the commission ever wants from its witnesses — was for Henry to listen to the questions she asked and answer them. Instead, an arrogant Henry disrespected Orr and the commission by trying to bully her. The attempt failed — Orr is made of tougher stuff — but it was an angry, dismissive, snide and flippant performance. Henry was angry when asked what better way there was to demonstrate intolerance of customer rip-offs than reducing the bonus pool. “Well, we could have fired everybody, I suppose,” he snapped. He was dismissive when asked...
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Banking royal commission: Ken Henry sets NAB back with Hayne appearance Australian Financial ReviewNov 27 2018 11:00 PM Chanticleer   Ken Henry's tone-deaf performance at the royal commission is exactly what National Australia Bank didn't need as it seeks to rebuild trust with the community. His attitude in the courtroom was a surprise to those of us in the gallery on Tuesday morning. Henry provided long answers that often took the form of lectures. He regularly told the commission the questions he thought it needed to answer. And he took an attitude towards senior counsel assisting, Rowena Orr, QC, that at times came across as dismissive. Asked by Orr whether he'd previously seen the very first document she showed him on Tuesday, Henry said he couldn't remember. "It doesn't matter really, does it?" he said, before looking up at Orr and hastily adding: "Maybe it does." If the style wasn't a...
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Banking royal commission: NAB chairman Ken Henry says full compliance would be 'quite extraordinary' Australian Financial Review Nov 27 2018 12:36 PM James Frost   NAB has been operating outside its own stated risk tolerance for more than three years and does not have plans in place to address many of the issues it faces, the Hayne royal commission has heard. NAB chairman Dr Ken Henry was being asked by counsel assisting Rowena Orr QC about the bank's seeming acceptance of compliance breaches and was shown the bank's own risk framework which states it has no "no appetite for non-compliance with legislation in the jurisdiction in which it operates or the voluntary codes it subscribes to". Dr Henry said the bank had more than 14,000 individual compliance obligations and it would be "quite extraordinary" if there was any point in time when the bank was fully compliant. He said that since...
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Ken Henry waxes lyrical on NAB’s backing the bold The Australian 11:00pm November 26, 2018 Ben Butler   A seven-word question — a 665-word answer. NAB’s chairman, former Treasury secretary Ken Henry, was in the mood to elaborate as he sat in the banking commission hot seat yesterday. Counsel assisting, Rowena Orr QC, wanted an explanation of the “purpose” Henry and his chief executive, Andrew Thorburn, picked out a couple of years ago — “to back the bold who move Australia forward”. “And what does that mean, Dr Henry?” she asked. She soon regretted the question. Out came a torrent of words that flowed through the bank’s 160-year history, the development of Vegemite — apparently it failed on the first try — to farmers doing it tough in the drought and young families buying a home. Zooming in on a single customer, he pulled back up again to reveal the bank’s...
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Banking royal commission: NAB chief executive Andrew Thorburn spreads the blame around Australian Financial ReviewNov 26 2018 8:26 PM James Frost   NAB chief executive Andrew Thorburn was questioned at length about why the bank has taken three years to resolve how it would repay customers for illegally charging them fees without providing services. The banking royal commission heard that NAB's top lawyer Sharon Cook, who was in the courtroom on Monday, proposed on April 13 this year that one group of customers be required to opt-in to the compensation process Asked about this most recent negotiation with the Australian Securities and Investments Commission, Mr Thorburn told by counsel assisting Michael Hodge that the strategy was the decision of former NAB wealth executive Andrew Hagger. "Somebody looking at your statement and listening to the evidence that you've given today might think that you are ... passing responsibility for this to Mr...
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  No credit crunch: RBA blames investors for drop in lending The Australian 11:00pm November 26, 2018 Andrew White   The Reserve Bank has again played down the role of a credit crunch in the housing market, with assistant governor Christopher Kent saying a fall in credit growth is also a result of lower demand from investors fearful of falling house prices. Mr Kent said competition between lenders had driven rates for property investment loans down at a faster rate than for owner-occupiers, suggesting lenders were battling a fall in demand for credit. And while lenders had passed on modest increases in funding costs to borrowers, there was still competition for borrowers, with rates for new loans below those for outstanding loans. “Credit supply is available to good-quality borrowers on good terms and there is a strong financial incentive to shop around,” Mr Kent told the Australian ­Securitisation Forum in Sydney...
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ASIC: Is it time for the corporate watchdog to be put down? ABC News26 November 2018 Ian Verrender business editor   It's an old and perhaps apocryphal tale. A hardened crim, on release from decades in prison, is marched into a classroom. The aim: to scare the wits out of the precocious young cherubs who think they needn't abide by society's rules. After several minutes of menacing stares and silence, our anti-hero begins reeling off a litany of misdemeanours and crimes and the amount of time spent in juvenile detention and ultimately, the big house. Finally, glaring from the front, he growls at his young charges. "Stay in school, get an education, use your brains and don't end up like me. "If I had my time over again, I'd have gone to university, picked myself up a degree in finance or law and gone into banking. You can rip off heaps...
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Garry Weaven tells APRA: drop the rubbish, serve members better The Australian 11:00pm November 25, 2018 Andrew White   Industry fund luminary Garry Weaven has called for a “radical re-education” of the prudential regulator, saying its priorities in the $2.7 trillion superannuation industry were “rubbish” and did little to further the interests of fund members. Mr Weaven, who helped establish the compulsory superannuation system and led the $700bn industry super fund sector, said the Australian Prudential Regulation Authority should be focused on “rooting out” long-term underperformance rather than trying to change the governance of funds. The focus on underperformance should extend to withdrawing the licences of chronic underperformers. But he said APRA should not have the sole responsibility for deciding which funds were eligible to receive default contributions. “APRA needs radical re-education. Most of the stuff that APRA spends its time on has been of virtually zero relevance to net benefit...
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  Westpac launches 'green' tailored deposits to take action on climate change Australia Financial Review Nov 25 2018 11:45 PM Mark Ludlow   EXCLUSIVE  Westpac is launching the world's first tailored "green" deposit scheme for big investors who want to back environmentally-friendly projects, saying wholesale investors are keen to take action against climate change. In a move Westpac expects will be followed by the other big banks, the green-tailored deposit product will only invest in schemes certified by the internationally-recognised Climate Bonds Initiative. Projects will include renewable energy, low-carbon transport, low-carbon buildings, forestry and land rehabilitation as well as waste and water projects. The City of Sydney Council has come on board as the first investor, committing $10 million over five years. As politicians fail to end a decade of policy uncertainty and the recent collapse of the National Energy Guarantee, Westpac Institutional Bank chief executive Lyn Cobley said the green...
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CBA CEO Matt Comyn warned of compensation risk The Australian 11:00pm November 25, 2018 Ben Butler   Matt Comyn told Commonwealth Bank chair Catherine Livingstone the bank might have to pay compensation for ripping off term deposit customers in a letter pitching for the chief executive’s job at Australia’s biggest financial institution, royal commission docu­ments reveal. The rip-off, which involved failing to tell term deposit customers they would get a much lower rate once a promotional period expired, spread across the banking industry in the mid to late 2000s after the corporate regulator investigated CBA over it but took no action. Late last year The Australian revealed that the Australian Securities & Investments Commission killed the investigation in 2010 despite legal advice that it had a strong case against the bank. It is estimated the rort cost customers across the industry as much as $200m a year, but The Australian is...
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Banking royal commission: NAB CEO Andrew Thorburn and chair Ken Henry to be quizzed on legal breaches Australian Financial ReviewNov 25 2018 11:00 PM James Frost   National Australian Bank chief executive Andrew Thorburn and chairman Ken Henry will be forced to defend their legacies against a mounting tide of evidence the bank has broken laws attracting civil and criminal penalties when they appear at the Hayne royal commission on Monday. The bank has had a horror year with financial performance issues, a mounting customer compensation bill and the bad behaviour of its staff examined in forensic detail by the inquiry into misconduct across the big four banks. Among the issues Mr Thorburn will need to explain is the bank's inability to report breaches of its licence to the regulator on time in breach of section 912D, while former Treasury secretary Dr Henry is likely to be asked why he signed...
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Mortgage brokers hit back at criticism of industry during royal commission Australian Financial Review Nov 23 2018 8:47 PM Ingrid Fuary-Wagner    Mortgage broker Josh Bartlett is astounded the banks have now turned on him and his like.  Bartlett, who has been building his Melbourne business for nearly a decade and this year wrote some $203 million worth of loans, suggests it is profit-seeking by the major banks that is responsible for negative sentiment surrounding mortgage brokers. "Since I've been in the game, all [the big banks] were ever doing was chasing us for business ... and now they want to turn the business off," Mr Bartlett says. "There would be big problems in the industry if there were no brokers ... the [bank] branches would collapse," he says. The recent housing boom has been a bonanza for brokers. As prices skyrocketed over the past five years, brokers, who earn a...
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Gordon Gecko Greed has been good for CBA The Australian 11:00pm November 23, 2018 Alan Kohler   It is not a well-known fact, but Gordon Gekko’s “greed is good” speech in the 1987 film Wall Street was actually about Commonwealth Bank of Australia, even though it still had nine years of government ownership ahead of it, and he’d never heard of it. In the movie, Michael Douglas’s character is speaking at the annual shareholders’ meeting of Teldar Paper Inc, and observes that the company has 33 vice-presidents each earning more than $US200,000 per year. “Now, I have spent the last two months analysing what all these guys do, and I still can’t figure it out … The new law of evolution in corporate America seems to be survival of the unfittest.” CommBank for sure. He then goes on to declare that he “liberates” companies, he doesn’t destroy them, and concludes: “The...
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Banking royal commission: ASIC’s awakening is just weeks old Australian Financial Review Nov 23 2018 1:50 PM Chanticleer (James Thomson)   The sirens finally – finally – appear to be wailing for Australia's tough cop on the corporate beat. The chairman of the Australian Securities and Investment Commission, James Shipton, revealed to the royal commission on Friday morning that he has told his squad of crime fighters  they need a good reason not to launch legal action when a financial institution reports a breach. And when was this sweeping show of strength made? Well, two or three weeks ago. The bewilderment of senior counsel Rowena Orr was obvious and infectious. She had taken Shipton to the example of Commonwealth Bank's mis-selling of credit card insurance. This is the case the royal commission examined back in August, where CBA admitted selling income protection insurance for credit cards to people who didn't have...
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Banking royal commission: James Shipton's ASIC faces independent oversight Australian Financial Review Updated Nov 23 2018 7:06 PM James Eyers   Corporate Australia faces years of litigation after the Hayne royal commission exposed the Australian Securities and Investments Commission for being a soft-touch regulator that was too close to the banks. The corporate regulator was lambasted for taking too long to investigate misconduct, was criticised for failing to take the banks on in court, and questioned over why its board lacked any independent directors. The final day of hearings in Sydney culminated with senior counsel assisting the inquiry Rowena Orr, QC, proposing an independent body to oversee the regulator, an idea ASIC chairman James Shipton conceded shouldn't be ruled out as an option. It seems clear that after a week of hearings featuring evidence from the chief executives of two of the big four banks and the conduct regulator that banks...
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Banking royal commission: ASIC supervisors to be 'raw, frank, blunt' Australian Financial ReviewNov 23 2018 5:30 PM James Eyers   The corporate regulator is concerned Commonwealth Bank is not passing its "raw messages" up the line to senior management, and insists its new supervisors embedded inside major banks will improve cultures even though the information they gather may be used for legal actions. The royal commission on Friday quizzed Australian Securities and Investments Commission chairman James Shipton on the role and concerns of its new supervisor teams, which the federal government backed with new funding in August. The first team of six is already working inside CBA, and Mr Shipton said their initial reaction is "we are not confident that that raw message [relating to ASIC's concerns about particular cases] is being escalated in direct and frank and clear terms to the senior most leaders". ASIC has received funding to put...
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ANZ doubles down on housing downturn: prices to fall 20pc Australian Financial Review Nov 22 2018 3:28 PM Nick Lenaghan   Housing prices could fall as much as 20 per cent across Sydney and Melbourne before the downturn is over, according to a revised forecast from ANZ. ANZ's economists are the latest to downgrade their predictions amid worsening signals from the housing market and the chilling effect of credit tightening. As recently as September, ANZ was tipping a a 10 per cent fall peak to trough in Sydney and Melbourne, while warning the current weakness in house prices would extend into 2020. In research published on Thursday, bank economists Daniel Gradwell and Jo Masters, revised their peak to trough forecasts for Sydney and Melbourne to falls of between 15 per cent to 20 per cent. "Until recently, housing prices have been performing broadly as we expected," they wrote. "And in fact,...
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Deloitte, EY, PwC's multiple 'independent' roles at the big banks Australian Financial Review Nov 22 2018 11:00 PM Edmund Tadros   EXCLUSIVE  The corporate regulator is allowing consultancy firms Deloitte, EY and PwC to police its enforcement regime for the big banks while they are paid millions for other consulting work, raising conflict concerns. The dual role raises questions about the ability of the consultants to be truly independent when there is a larger, and ongoing, commercial relationship with the client, a problem that has been raised repeatedly by the banking royal commission over "independent reports" produced by Clayton Utz and EY. The Australian Securities and Investments Commission, whose chairman James Shipton was accused of being too cosy with the banks on Thursday at the royal commission, was slammed in an interim report by Commissioner Kenneth Hayne for failing to take legal action against corporate wrongdoers. The regulator's preference for "negotiated...
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