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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Property bubble called by economist and former Liberal leader John Hewson ABC News23 March 2017 12:50pm Michael Janda business reporter   Australia's housing market is in a bubble caused by the "neglect and drift" of successive state and federal governments, economist and former Liberal leader John Hewson has concluded. Speaking as part of a panel during a Lateline special on housing affordability, Dr Hewson said national economic data conclusively showed evidence of a housing bubble. "I think it's a crisis, it is a bubble. I know people are hesitant in saying that, it is a bubble," he said. "House prices have gone up 250 per cent since the middle '90s in real terms. "Household debt is more than 200 per cent of disposal income, 120 per cent of GDP, and it stands as a monument really to neglect and drift by both levels of government." Dr Hewson is not the first one to...
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Australia’s housing bubble smashes all records Macro Business12:20 am on March 22, 2017 Leith van Onselen   The ABS yesterday released its property price data for the December quarter, which valued Australia’s dwelling stock owned by households at a record $6.11 trillion dollars. As shown below, the total value of Australia’s dwelling stock was an all-time high 7.5 times incomes as at December 2016, up from 7.1 times incomes a year prior:   Similarly, the ratio of dwelling values against Australian GDP hit a record 3.6 times as at December 2016, up from 3.5 times GDP a year prior: When divided by Australia’s population, Australian housing was worth a record $252,000 per man, women and child: Australia’s house prices are also showing a record divergence from rents: In fact, since Australian house values bottomed in September 2012, prices have risen by 34% in real terms versus only a 1% increase in...
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Fintechs like Hashching cash in on bank lending limits to curb property boom Australian Financial Review Mar 23 2017 4:29 PM James Eyers   As regulators weigh new limits on bank lending to cool the housing boom, their impact may be muted as tech-savvy borrowers turn to fintechs to access cheaper rates offered by non-bank lenders. Hashching is raising $6 million of fresh equity on the Neu Capital fundraising platform in a deal valuing the Sydney-based start-up – which gives borrowers access to the best interest rates negotiated by mortgage brokers – at $40 million. Since it was set up in August 2015, Hashching has received applications for $5 billion of home loans, which has doubled in the last five months. Around 20 per cent of loans are made to property investors. On the platform, borrowers are increasingly turning to loans from non-bank lenders who are undercutting the big banks on price, said Hashching...
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Banks may need up to $40b for risk weightings Australian Financial Review Mar 23 2017 11:00 PM James Frost   Higher risk weightings designed to slow the rate of property price growth being considered by the regulator may require banks to hold up to $40 billion in additional capital against loans to property investors, weighing heavily on return on equity and bank profits. The risk weighting for home loans is currently 25 per cent regardless of whether the loans are for owner occupiers or higher risk property investors. Veteran CLSA bank analyst Brian Johnson believes that a 10 percentage point move in the risk weightings for investor home loans will require the big four to hold an additional $5.3 billion in capital. He says that a move in the risk weighting of this magnitude will require an additional $900 million from ANZ, $1.5 billion from Commonwealth Bank, $1.2 billion from NAB...
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ASIC’s Kell takes aim at CommInsure’s ‘outdated’ life policies The Australian 12:00am March 24, 2017 Michael Roddan, Ben Butler   The Australian Securities & Investments Commission deputy chairman Peter Kell has hit out at exemptions for life insurers from consumer protection regulations, after current weak laws hamstrung the corporate watchdog’s investigation into Commonwealth Bank’s Comm­Insure division. ASIC’s review of CommInsure, which yesterday cleared the company of allegations it pressured doctors to deny claims, failed to interview any customers as part of its investigation. That was despite Mr Kell noting some had “highly distressing experiences” after the insurer denied claims by using out-of-date medical definitions. CommInsure has since backdated its heart attack definitions to 2014. Claims-handling practices are currently exempt from financial services conduct laws which require efficiency, honesty and fairness in company dealings — an exemption ASIC is pushing hard to overturn. Despite the short six-page report giving an overall clean...
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  John 'Wacka' Williams to cross floor on banks probe Australian Financial Review Mar 23 2017 7:01 PM Belinda Merhab (AAP)   Days after revealing his battle with Parkinson's disease, John "Wacka" Williams has vowed not to bow out of federal parliament a hypocrite. The Nationals senator, an outspoken critic of bad behaviour in the banking sector, will cross the floor to support a private Greens bill to establish a rare form of parliamentary inquiry into the banking and financial services sector. "All I want to do when I leave this place in a bit over two years' time is to see this sector cleaned up, see ASIC doing their job better, see people getting good financial advice, to have confidence in their institutions," he told parliament on Thursday. "I'm not going to leave this place in a bit over two years' time saying that at some stage I made a...
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Units resold at a loss in Brisbane, Melbourne The Australian 12:00am March 23, 2017 Turi Condon   Losses on the wave of new apartments are starting to mount with a hefty 60 per cent of units bought off the plan in inner Melbourne since 2011 breaking even at best or reselling at a loss, while inner Brisbane saw 40 per cent of resales tread water or lose money, according to new research from BIS Oxford Economics. Sydney has yet to feel much impact from the unit-building boom, with only 4 per cent of resales made at the purchase price or below. The research comes amid warnings from regulators, bankers and economists over stratospheric housing price growth in Sydney and Melbourne, amid expectations that investors will face a tougher times as lending criteria continue to tighten and investor mortgage rates rise. In Brisbane, property veteran Kevin Seymour’s company examined pockets of the inner city...
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Sydney mortgage holders carrying huge debt loads   By Guest in Australian Property at 12:06 am on March 22, 2017 | 0 comments http://www.macrobusiness.com.au/2017/03/sydney-mortgage-holders-carrying-huge-debt-loads/   By Martin North, cross-posted from the Digital Finance Analytics blog: We have updated our core market model with household survey data this week. One interesting dynamic is the LTI metrics across the portfolio. We calculate the dynamic LTI, based on current income and loan outstanding.  This is not the same a Debt Servicing Ratio (DSR), and is less impacted by changes in mortgage rates. It is also a better measure of risk than Loan To Value (LVR) LTI has started to become an important measure of how stretched households are. For example the Bank of England issued a recommendation to the PRA and the Financial Conduct Authority (FCA) advising that they should ‘ensure that mortgage lenders do not extend more than 15% of their total number...
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NEW ASIC REPORT FURTHER EVIDENCE OF NEED FOR A ROYAL COMMISSION     Posted by Katy Gallagher · March 17, 2017 3:10 PM http://www.katygallagher.net/media The corporate watchdog has released yet another scathing report into the big financial advice firms, finding that they have not done enough to report misbehaviour by their financial advisers. Only one week ago the CEOs of the big four banks lined up in Canberra to reassure community that the banks were changing their ways, however, the ASIC report paints a very different picture.                    Key findings of the report released today include: Failure to notify ASIC about serious non-compliance concerns regarding adviser conduct; Significant delays between the institution first becoming aware of the misconduct and reporting it to ASIC; Inadequate background and reference-checking processes; and Inadequate audit processes to assess whether the advice complied with the "best interest" duty and other obligations. ASIC also noted: “…many of the...
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Fed Chair Yellen Repeats “Alternative facts” from New York Times on financial crash   By Pam Martens and Russ Martens: March 20, 2017 http://wallstreetonparade.com/2017/03/fed-chair-yellen-repeats-alternative-facts-from-new-york-times-on-financial-crash/ Last Wednesday Janet Yellen, the Chair of the Federal Reserve (the central bank of the United States) regurgitated the notoriously fake information that has been spewing from columnists at the New York Times since 2012 on the causes of the epic Wall Street financial crash of 2007 to 2010. Yellen was taking questions during her press conference on the Fed’s announcement of a rate hike. John Heltman, a reporter for American Banker, posed the following question to Yellen: Heltman: “The administration recently reiterated its support for reinstatement of Glass-Steagall. Treasury Secretary Munchin has called for a 21st Century Glass-Steagall. Keeping in mind that there’s no specifics on this proposal, is the fundamental idea of separating commercial banking from investment banking a fruitful line of inquiry. Is this...
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Banks spotted the loophole in the National Credit Act and have been training even customers to be ‘spotters’ to keep the ponzi going...and it’s taken ASIC several years to figure that one out??? Referrers being paid ‘almost as much’ as brokers 21 March 2017                 James Mitchell 2017 https://www.theadviser.com.au/breaking-news/35861-asic-agents-developers-receiving-upfront-commissions There has been a sharp increase in the use of mortgage referrers, such as real estate agents and developers, whom are being paid “almost as much” as mortgage brokers in commissions “despite doing much less”, according to the financial services regulator. ASIC’s Review of mortgage broker remuneration, which was released for consultation last week, included 13 findings about mortgage distribution and the home loan market.  Notably, the regulator highlighted that those who merely refer consumers to lenders are paid “almost as much as brokers”, despite “doing much less”. The regulator described mortgage referrers as individuals or...
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Why would Australia & NZ allow so much immigration if not to keep churning houses?  Great solution?  Not really!   Population Ponzi sinks New Zealand government By Unconventional Economist in New Zealand Economy at 8:59 am on March 22, 2017 | 1 comment By Leith van Onselen http://www.macrobusiness.com.au/2017/03/population-ponzi-sinks-new-zealand-government/ With the general election scheduled for 23 September, things are starting to look bad for the recently promoted Prime Minister of New Zealand, Bill English, delivering a stark warning to Aussie politicians. Yesterday, Stuff.co.nz reported that the latest Newshub-Reid Research poll has placed Bill English on 25% in the preferred prime minister rankings. The result puts him 11 percentage points behind Key’s 36.7% result in August last year – which was his worst result in the Newshub poll. English’s result was also the lowest figure for a sitting Prime Minister in at least 10 years, dating back to Helen Clark’s final term in...
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ABC Lateline does housing affordability   By Unconventional Economist in Australian Property at 9:32 am on March 22, 2017 | 5 comments   http://www.macrobusiness.com.au/2017/03/abc-lateline-does-housing-affordability/   By Leith van Onselen   ABC Lateline last night aired a segment on housing affordability, which involved a panel discussion involving:   ·           ·         https://www.youtube.com/watch?v=OCpsLjhHIi0 ·         Former federal leader of the Liberal Party John Hewson; ·         Director of research at Essential Media Rebecca Huntley; ·         Managing Director of Market Economics Stephen Koukoulas; and ·         Victorian CEO of the Urban Development Institute of Australia Danni Addison.   The segment discussed a variety of policy options on the table including: ·         Unwinding negative gearing and the capital gains tax discount; ·         Bond aggregator model for social housing; ·         Abolishing stamp duties for a broad-based land tax; and ·         Shared equity schemes.   The discussion is decent and balanced, with John Hewson stealing the headline for stating the...
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Malcolm's Free Market Insane Policy delievr YOU this............. PROPERTY PRICES out of control.  GLUT in apartments, unaffordable toxic interest only loans, defaulting mortgage loans, homelessness increases whilst there are so many empty homes and the list continues! Property prices up again, sparking renewed fears of market threats Jennifer Duke 21 Mar 2017, 3:23 p.m.         http://www.farmonline.com.au/story/4544421/property-prices-up-again-sparking-renewed-fears-of-market-threats/?cs=4733   Speculation about a housing bubble is likely to heat up even further, with Sydney and Melbourne property prices up more than 5 per cent. Sydney house prices 'to fall 5 per cent over two years' Three graphs that show struggle is real for first home buyers Australians expect affordability to deteriorate further by 2027     Speculation about a housing bubble is likely to heat up even further, with Sydney and Melbourne property prices up 5.2 per cent and 5.3 per cent respectively over the three months to December, official data...
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Prime Minister John Howard – apparently acting on the advice of businessman John Ralph   It’s In Everyone’s Interest To Tackle Australia’s Housing Affordability Crisis By Glen Andersonon March 21, 2017 Business & Consumerism https://newmatilda.com/2017/03/21/its-in-everyones-interest-to-tackle-australias-housing-affordability-crisis/ The bubble is getting bigger, which means the inevitable burst will be messier. Dr Glen Anderson explains why we need to do something about housing prices sooner rather than later. Australia’s housing affordability crisis has many dimensions. One that is routinely overlooked is its social corrosiveness. As median house prices surge ahead of wages growth, many young families who aspire to save for a mortgage deposit are remaining for years with understanding parents and in laws. This squeezes more Australians into smaller living spaces, thereby ensuring a decline in material living standards across all generations. Indirectly, these circumstances may be contributing to Australia’s declining fertility rates. In 2012, Australian Bureau of Statistics data revealed that women...
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Banks unable to foreclose on farmers without debt mediation under new Queensland laws By Gail Burke http://www.abc.net.au/news/2017-03-22/banks-cannot-foreclose-farmers-debt-mediation-new-qld-laws/8375502   Banks will not be allowed to foreclose on struggling Queensland farmers without first offering them debt mediation under new laws passed in State Parliament.   Labor and the LNP supported the Farm Business Debt Mediation Bill, which would require financial institutions to offer mediation to farmers who were in arrears before starting enforcement action. Queensland Agriculture Minister Bill Byrne said it was an alternative to expensive and drawn-out legal battles.   "We want to ensure farming families experiencing financial difficulty are treated fairly by financial institutions when they are faced with the daunting prospect of selling property assets to repay loans," Mr Byrne said. "We know that mediation is a vastly preferable mechanism and effectively done, people can come out of that with a good outcome and it's the best chance of people...
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Well he got it in one re what is now ready to blow up...and before the Big Short had even been made that explained squared derivatives! Grandmothers, perhaps try ducking for cover February 22, 2014 http://www.michaelwest.com.au/grandmothers-perhaps-try-ducking-for-cover/ OPINION Got a call from a contact the other day; you’d better have a look at this, he said. There it was: half a story we had penned two months before, all but cut and pasted onto a glossy website called The SMSF Club. “Are management fees devouring your savings?” was the big bold headline. Beneath it was the guts of our story, some research from a funds manager Chris Brycki who had looked at 497 managed funds and found that over the past five years investors had given away half their investment returns (which averaged 2.3 per cent) in fees (1.91 per cent). Reading further in The SMSF Club rendition of the yarn was...
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Sword of Damocles hangs over PM Turnbull   Sydney Morning Herald March 22 2017 - 12:15am Adele Ferguson   Come Thursday a royal commission or commission of inquiry into the scandal-ridden banking sector will be a genuine live issue in the Federal Parliament. From that point, the sword of Damocles will dangle precariously over Prime Minister Malcolm Turnbull's head, waiting for the right moment to fall. ASIC takes aim at the banks ASIC chairman Greg Medcraft tells the Economics Legislation Committee bank culture is still an issue that needs to be addressed. All it will take is one more Coalition MP in the lower house to cross the floor. Tick-tock, tick-tock. The clock was set on Tuesday when a bill was tabled in the Senate with the backing of a majority of the upper house. The bill's signatories include Greens senator Peter Whish-Wilson, independents Derryn Hinch and Jacqui Lambie, Nick Xenophon and...
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British banks including HSBC, RBS, Barclays and Coutts 'processed £600million in multi-billion pound Russian money-laundering scam'    As much as £65bn could have been moved out of Russia between 2010 and 2014  1,920 transactions went through UK banks and 373 through US banks  Records obtained by the Organised Crime and Corrupting Reporting Project  Read more: http://www.dailymail.co.uk/news/article-4332984/Banks-processed-600m-Russian-money-laundering-scam.html#ixzz4c1RhA4Ov    By FIONN HARGREAVES FOR MAILONLINE Some of the UK's top banks allegedly processed around £600 million in a multibillion-pound Russian money-laundering scam. High street names including HSBC, the Royal Bank of Scotland, Barclays and Coutts are among those involved, The Guardian reported. More than £16 billion and maybe as much as £65 billion was moved out of Russia between 2010 and 2014, the paper said.     +3 Some of the UK's top banks, including HSBC (pictured), the Royal Bank of Scotland, Barclays (pictured) and Coutts, allegedly processed around £600 million in a multibillion-pound Russian money laundering scam    ...
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http://www.abc.net.au/news/2017-03-20/morrison-medcraft-flag-property-investor-lending-crackdown/8369612         http://www.abc.net.au/news/2017-03-20/morrison-medcraft-flag-property-investor-lending-crackdown/8369612   Australia's Treasurer and chief corporate regulator have both flagged a further crackdown on property investor loans, as the regulator implies house prices are at risk of a massive fall. Key points: ·         ASIC boss warns housing prices typically revert to four times incomes; Sydney above 12, Melbourne near 10 ·         Regulator says banks "trusted" by borrowers to determine if they can afford a loan ·         Treasurer says regulators discussing further limits on property investor lending Limits on investor lending were first introduced in late-2014 in an attempt to cool an overheating property market. However, with recent home price index readings showing annual price rises of around 18 per cent for Sydney, 15 per cent for Canberra and 13 per cent for Melbourne, and official data showing a renewed surge in property investor lending, financial authorities have floated the possibility of tightening those rules restricting investment loans. "There remain pressures that have built...
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