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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Buy now, pay in 5 years: Brisbane developer offers deferred settlement on units Australian Financial Review Feb 28 2018 11:00 PM Michael Bleby   A Brisbane developer backed by Johnny Kahlbetzer's business Jemalong is giving buyers five years – when credit curbs should have eased – to settle purchases of the 20 remaining apartments. Reed Property Group is offering the handful of apartments left in the 228-unit Belise project in Brisbane's Bowen Hills on a deferred settlement basis out of recognition of the difficult financing environment for investors, director Richard Ash said. Under the plan, buyers who pay a "reasonable" deposit – of $60,000 or more – can take possession of a unit and pay monthly lease fees – equivalent to rent – and settle only in five years, when the developer would hand over the title, Mr Ash said. Reed, which is 45 per cent owned by Jemalong Property Group,...
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Financial doomsayer says Australian property prices could crash by 50 per cent in coming global crisis news.com.au FEBRUARY 28, 2018 Frank Chung   AUSTRALIAN property prices could crash by up to 50 per cent in a looming global crisis tipped to be worse than the GFC and possibly even the Great Depression, according to a well known doomsayer. Harry Dent, a US demographer and financial commentator who correctly predicted the 2008 crash, has warned of a “major political and social revolution brewing” very similar to the American Revolution of the late 1700s. He argues the global real estate and stock market “bubble”, artificially inflated by central bank money printing policies, will pop within the next five years — but most likely some time between the end of 2018 and early 2020. “I’m talking about a second global crisis because we never solved the problems of the first one,” he said. “We...
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'Shrouded in shadow': Australia's 'absurd' mortgage market Sydney Morning Herald 26 Feb 2018 — 3:41pm Sarah Danckert   The most important financial product in the lives of many Australians - the household mortgage - is “shrouded in smoke and shadow”, making it nearly impossible to assess if we are getting a good deal, the man responsible for reviewing competition in the banking sector says. Productivity Commission chairman Peter Harris on Monday criticised the lack of transparency on prices for mortgages. He also took aim at the lack of clarity around how mortgage brokers are paid by the banks and how they save the banks money. The Productivity Commission was asked by the government to review competition in the banking sector amid concerns that there are little variances between interest rates set by major banks and mortgage brokers. "On its face, in fact, it is pretty absurd that customers still have to...
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This year a 'critical test' for housing market: Westpac Australian Financial Review Feb 28 2018 3:17 PM Patrick Commins   A sharp slowdown in price growth in 2017 leaves Sydney's annual house price growth "poised to dip into negative for the first time in 5½ years", Westpac economists say. Macro-prudential restrictions, weaker foreign buyer demand, stretched affordability, and a lift in new dwelling supply have all weighed on house price growth, and those factors remain in place, the bank's economics team told clients. As such, this year is "shaping as a critical test of the [housing] market's resilience". "While most other markets [outside Sydney] are holding up better, all major states have seen price growth moderate and turnover fall to historically low levels." The warning from one of the country's largest banks comes even as the Reserve Bank of Australia modulates its rhetoric on property market risks. In a recent speech,...
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Home loan fraud, brokers in banking royal commission spotlight The Australian 12:00am February 27, 2018 Ben Butler   Home loan fraud at National Australia Bank and Commonwealth Bank-owned mortgage broker Aussie Home Loans, together with CBA’s dealings with its network of mortgage brokers, are among issues to be examined by the royal commission into the banks at its first public hearing in a fortnight. The commission, headed by former High Court judge Kenneth Hayne, is to turn its blowtorch on to all four big banks over consumer lending issues including home loans, car finance, credit cards and insurance add-ons. CBA, which has been at the centre of many of the scandals that have engulfed the financial services industry in recent years, is to receive the most attention, with four case studies scheduled to examine its practices. These included “Aussie Home Loans fraudulent brokers and broker arrangements” and “CBA accreditation of brokers...
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CBA sought meeting before new Austrac claims laid The Australian 12:00am February 26, 2018 Michael Roddan   The Commonwealth Bank asked the anti-money-laundering regulator Austrac to hold quarterly meetings between the two organisations’ chief executives a day before the financial intelligence watchdog filed an expanded suite of allegations against the bank in the Federal Court in December. According to internal documents obtained by The Australian, CBA also asked Austrac to meet “every second month” to talk about the bank’s regulatory overhaul, known as the “program of action”. The program, aimed at helping the bank comply with anti-money-laundering legislation, was launched after the bank first discovered it had failed to send the regulator thousands of legally required transaction reports, which originally sparked the landmark legal suit against the company. When Austrac widened its extensive claims against the nation’s largest lender on December 14, it included the allegation that CBA was considered to...
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APRA to face questions on 'liar loans' review Sydney Morning Herald26 Feb 2018 12:15am Clancy Yeates   Banking regulator Wayne Byres is expected to face questions about an official probe into fraud risk in the $1.6 trillion mortgage market when he appears at Senate estimates this week, after it was confirmed major banks provided the regulator with external audits on the topic at least nine months ago. The Australian Prudential Regulation Authority (APRA) in late 2016 kicked off a review covering mortgage fraud control, and in response to a Freedom of Information (FOI) request from Fairfax Media, APRA said it received external audits from five major banks in April and May last year. APRA  declined to release the audits under FOI laws, citing strict secrecy provisions in the APRA Act, and said it had not produced a final report on the topic "yet". Even so, APRA chairman Mr Byres is likely...
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Banks ‘belong to you’ campaign is a stretch The Australian 12:00am February 26, 2018 Adam Creighton   For sheer hubris it’s hard to go past the “Australian Banks Belong to You” campaign — the Australian Bankers Association effort to soothe community anger against banks during a potentially incendiary royal commission. You would have had to have lived under a rock not to have been reassured by Gracie, a Westpac ­receptionist for 33 years, that banks don’t keep all their profit: “Nearly 80 per cent go back to shareholders. The majority of those shareholders are everyday Australians.” “Australian bank profits belong to Australians,” chimes in Jake, a home-loan specialist at SA Bank, while Wesley, a branch manager at National Australia Bank, tells us that the profits go to “everyday Australians”. It’s seems former Labor PM Ben Chifley, who wished to nationalise the banks, has received his wish. The idea “our” banks “belong”...
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Of course Prime Minister in a Muddle Turnbull would state this when right in the thick of it himself...........Prime Minister Malcolm Turnbull has not ruled out forming such a body, he says he still needs to be convinced of the need for it. Australia slides further in global corruption index in wake of scandals 22 February 2018 Adam Gartrell http://www.smh.com.au/federal-politics/political-news/australia-slides-further-in-global-corruption-index-in-wake-of-scandals-20180220-p4z12o.html Revelations of dodgy donations, travel rorts and the cosy relationship between politicians and industry lobbyists appear to have battered people's trust in Australia's public sector, pushing the nation downwards in a global corruption index. Transparency International's annual Corruption Perceptions Index shows Australia's score has fallen another two points - from 79 out of 100 down to 77 - reflecting growing community scepticism about the integrity of the nati of the nation's institutions. The anti-corruption organisation says while Australia's ranking is unchanged - it remains equal 13th out of 180 countries -...
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Doesn’t matter if a victim is gullible and uneducated or astute and knowledgeable ..... remember when s 51A was added to Trade Practices Act  five decades ago?   Little reported in Australian media, the NAB has come in for serious criticism in the British Parliament as a bank that engages in unethical practices. Dr Evan Jones commences his two-part series. NAB’s Clydesdale subsidiary (Part One) The Clydesdale and Yorkshire Bank: Long under the media radar https://independentaustralia.net/business/business-display/the-parlous-history-of-the-nabs-clydesdale-bank-part-1-long-under-the-radar,11228 The National Australia Bank previously owned a subsidiary in Britain: the Clydesdale and Yorkshire Bank (Clydesdale). When Andrew Thorburn became NAB CEO in August 2014, he soon announced an intended divestment of Clydesdale. The NAB finally sold off Clydesdale in early 2016, with a “de-merging” to NAB shareholders and a partial listing.  In non-existent to spotty coverage in the Australian press over many years (usually in reporting of the NAB’s financial results), Clydesdale has been...
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So Turnbull has just offered the US $2.53 trillion of our super funds....nothing to do with this – i.e. payback time?........the banks have a total of $2.59 trillion of on-balance sheet assets. Nothing has changed since 2010.  There’s only so long that banks can keep the ponzi going. They’ve scraped through by the skin of their teeth thanks to an unprecedented bail-out by the taxpayer.  In 2010 NAB chief executive Cameron Clyne, referred to Australian banks’ dependence on wholesale funding markets as their Achilles heel…  Banks have been borrowing funds for mortgage monies from international wholesalers on Lines of Credit for over a decade.   Aussie Banks In Market Crosshairs 11 May 2010 https://barnabyisright.com/tag/credit-default-swaps/ The markets have begun lining up Australia’s banking system in the crosshairs.  How do we know?  Late last week, the spreads on credit default swaps (CDS) for Australia’s banks widened the most of all banks in the world. By...
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Nationals MP George Christensen calls for an end to the Coalition  Is this political HIGH NOON?   Eryk Bagshaw 17 Hours ago https://www.msn.com/en-au/news/australia/nationals-mp-george-christensen-calls-for-an-end-to-the-coalition/ar-BBJvY1q?ocid=ientp Nationals MP George Christensen has called for the end of the Coalition, after the scandal engulfing former deputy prime minister Barnaby Joyce threatened to tear the partnership apart. The maverick MP, who has a habit of making provocative comments and threatening to leave the government, said he wanted to see a National Party in coalition with regional Australia "rather than wedded to a Liberal Party lurching further away from the values we still hold". Putting an end to the Coalition would risk the collapse of the Turnbull government and the century-old agreement between the two parties, leaving the Liberal Party reliant on the Nationals to guarantee supply and confidence. In December, Mr Christensen reneged on his threat to desert the Coalition if Prime Minister Malcolm Turnbull was still...
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Mortgage broking fees to be targeted by Hayne royal commission Australian Financial Review Feb 22 2018 7:25 PM James Eyers   The Hayne royal commission's latest briefing paper calls out mortgage commission payment structures and part-ownership by big banks as areas of inquiry, providing the strongest indication yet that the broking industry will be in its sights. In the second of its "background papers", the financial services royal commission suggested it may seek to quiz lenders and brokers at hearings next month on potential conflicts of interest in the industry, which were also identified by the Australian Securities and Investments Commission in a major report last year that called for banks to stop paying brokers bonus commissions. The royal commission's paper, published on Thursday afternoon, recognised mortgage broking plays an increasingly prominent role in the economy, with loans placed by brokers increasing from 44 per cent of new residential home loans...
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Banks warned interest-only loans will irk APRA The Australian 12:00am February 22, 2018 Michael Roddan   Australia’s biggest banks risk provoking the prudential regulator if a move to attract new interest-only borrowers results in strong growth in sales of the riskier type of loan. The largest banks in the sector are all well below the Australian Prudential Regulation Authority’s 30 per cent limit on interest-only loans, which was forced on the sector last March. Lenders were given until the September quarter last year to comply with the rule, which was aimed at reducing the amount of new mortgages going to investors who don’t pay down the principal amounts on loans over time. But analysts now believe the major lenders will start to drop ­interest rates to encourage borrowers to take up interest-only loans, having reduced interest-only flow to well below the cap. ANZ on Tuesday revealed only 14 per cent of...
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Bank analysts turn bearish on royal commission outcome Australian Financial Review Feb 21 2018 8:17 AM James Frost   The big four banks have received a third set of requests from the banking royal commission around specific product lines ahead of two weeks of public hearings focused on consumer credit products. Commissioner Ken Hayne has written to the banks with the expectation they will make the relevant executives with knowledge of the products available to the royal commission when public hearings begin on Tuesday, March 13. Analyst commentary around the sector has turned bearish in recent days as experts brace themselves for a series of bruising encounters with regulators described by one as "moments of truth" which threaten to crimp bank returns in the years ahead. UBS analyst Jonathan Mott has revised his 12-month share price targets for the big four banks already down 5 per cent to 6 per cent...
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Home loan alert: $140bn mortgage shock looms for Australian economy Herald Sun February 21, 2018 12:14pm Jeff Whalley   THE number of Aussie property investors facing a rude shock this year as their mortgage payments spike is much higher than previously thought, a new analysis suggests. More than $140 billion in interest-only home loans could mature this year, sending a shockwave through the Australian financial system, according to the analysis. It suggests a rude awakening is in store for Australia’s financially-stretched housing investors as the property market cools. The analysis indicates the number of investors facing a surge in their repayments this year — as their interest-only periods end — may have been grossly underestimated. The warning comes after the Reserve Bank yesterday raised concerns about financial stress among investors who took out mortgages at the height of the boom. Assistant governor Michele Bullock noted many interest-only loans, written before lending...
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NAB swings axe on first 1000 jobs Australian Financial Review Feb 19 2018 11:02 AM James Frost   NAB is poised to cut 1000 jobs as part of a strategy to remove layers of middle management and simplify the bank that was announced by chief executive Andrew Thorburn in November. The bank needs to make 1000 positions redundant every six months as part of a plan to cut a total of 6000 jobs over three years while bolstering its workforce with 2000 technology specialists. The first tranche of job cuts, as flagged by The Australian Financial Review's Street Talk column last week, were confirmed by the bank on Monday morning. NAB's chief people officer Lorraine Murphy acknowledged it was a difficult time for those affected by the cuts in internal communications seen by the Financial Review. "We said we would provide the utmost care and respect for all of our people,"...
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Department of Finance accused of fudging efficiency data Australian Financial Review Feb 18 2018 11:00 PM Edmund Tadros   The Department of Finance has been accused of fudging data to argue that an ongoing crackdown on departmental spending was reducing the overall cost of running the federal bureaucracy. The data, which formed part of a Finance submission to the ongoing inquiry in the use of consultants, purported to show department expenses as a proportion of total government expenses was falling over time from 8.5 per cent, or $23.7 billion of total general government sector expenses of $280.5 billion in 2007-08, to 7.1 per cent in 2015-16. Finance used the data in a graph, table and accompanying commentary in its submission to assert "the net impact of entity resource decisions, including the appropriate use of procurement, is continuing to improve the efficiency of government service delivery". The only problem is that while...
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Farm debt: Banking royal commission tipped to move on agribusiness mediation Australian Financial Review Feb 18 2018 11:00 PM James Frost   The banking royal commission is being urged put an end to the patchwork of state-based mediation schemes for agribusiness customers and establish a single national body for working through disputes with banks. The move would deliver the time-poor inquiry headed by Commissioner Kenneth Hayne an easy win, with the current state-by-state system enjoying few supporters. National Farmers Federation policy director Tony Mahar said the existing system, which only guaranteed farmers in Victoria, NSW and Queensland with access to a formal mediation service, was inadequate. "It's fragmented and unhelpful, what we need is a national approach for farmers and financial institutions." The Hayne royal commission is believed to be aware of the disjointed approach to mediation, drawing attention to the problem by dedicating two pages of its recent report on...
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SMSF limited recourse borrowing must stop The Australian 12:00am February 19, 2018 Glen McCrea Glen McCrea is chief policy officer at The Association of Superannuation Funds of Australia.   Volatility in equity markets recently is a useful reminder not to put all your eggs in the one basket. It tells us that what goes up can go down rapidly. This reminder also applies to the quarter-acre block or the apartment off the plan. The low-interest environment in recent years has helped fuel demand for property by investors, including mums and dads and self-managed superannuation funds. A risk to the retirement savings of individuals and a structural risk to economy have been created because many SMSFs are borrowing to purchase property. This borrowing grew 50 times, from $497 million in June 2009 to $25.4 billion by June 2016. More than 90 per cent of it related to property. Growth by 5000 per...
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