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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'What do we have to lose': soft touch ASIC laid bare at commission Sydney Morning Herald 22 November 2018 7:39pm Sarah Danckert, Clancy Yeates   The corporate regulator's reluctance to prosecute the big banks has been laid bare at the royal commission after it emerged senior staff at the watchdog opposed taking action against National Australia Bank over a home loan fraud. The revelation came as Australian Securities and Investments Commission chairman James Shipton gave assurances during his evidence at the commission that he would ensure ASIC was no longer seen as being too close to the banks and one that didn’t apply the full force of the law. During Thursday's hearing, counsel assisting Rowena Orr, QC, confronted Mr Shipton with an internal email by senior manager Kevin Foo in July that detailed a discussion of a meeting at ASIC about whether to take action against the bank. Following the meeting,...
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Banking royal commission: James Shipton probed on ASIC's relationship with banks Australian Financial Review Nov 22 2018 5:14 PM James Thomson   The chairman of the Australian Securities and Investment Commission, James Shipton, possibly walked into the royal commission witness box expecting to be chastised for not talking enough to naughty banks and financial institutions. Instead, he was interrogated for talking to them too much. After softening Shipton up with a series of questions about the expansion of ASIC's regulatory remit and the more modest expansion of its resources, senior counsel assisting Rowena Orr began asking about Shipton's engagement with chief executives and boards. Shipton said his contact was regular and irregular, formal and informal – annual meetings with boards, for example, as well as ad hoc phone calls with CEOs when a point needs to be made. "I've called CEOs to express dissatisfaction on a number of occasions as regards...
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IMF backs negative gearing curbs in broader tax reform Australian Financial Review Nov 20 2018 9:09 PM John Kehoe, Jonathan Shapiro   The International Monetary Fund has signalled qualified support for Labor's plan to curtail negative gearing, but warned that reducing tax breaks that encourage excessive borrowing should be part of a broader tax reform and be rolled out carefully. In an interview at the conclusion of a review of Australia's economy, IMF mission chief to Australia Thomas Helbling told The Australian Financial Review that tax incentives for leveraged real estate and shares, as well as tax concessions for other assets, should be reviewed. Cautiously weighing into the politically-charged debate over Labor's proposal to unwind negative gearing and capital gains tax concessions, Mr Helbling said the fund had long supported discouraging too much borrowing for assets including residential real estate. "Australia would benefit from broader tax reform, including revisiting tax concessions...
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Financial planning ethics chief to front industry angry about possible conflicts Australian Financial Review Nov 21 2018 11:00 PM Robert Bolton   The new chief executive of the Financial Adviser Standards and Ethics Authority fronts financial planners on Thursday as his organisation is criticised for lacking transparency, possible conflicts of interest and not taking previous qualifications into account. Stephen Glenfield, who was appointed CEO of FASEA in June, will outline to the Financial Planning Association annual congress the new industry code of ethics and seven pieces of legislation, some of which are meant to be in place by January 1. [Glenfield is a former APRA executive. See his short bio here. He’s the bloke who told the royal commission back in August about how his “front line” supervisory team kept getting knocked back by APRA’s so-called Enforcement division whenever they reported dirty deeds by superannuation trustees. –RJB] The founder of Portfolio...
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Banking royal commission: 10 minutes that shamed the Commonwealth Bank board Australian Financial ReviewNov 21 2018 11:00 PM Aaron Patrick   As a former logistics executive, Commonwealth Bank of Australia chairman David Turner liked to run his board tight. At meetings of the board's remuneration committee agenda items were allocated 10 minutes. Directors were presented papers prepared by the bank's staff to help them understand each issue. Direct discussion with bank executives beforehand wasn't encouraged. A desire to move briskly through board business explains why a meeting of the committee on August 8, 2016, that approved short-term bonuses for the bank's senior staff worked on the decision from just 12.40pm to 12.50pm. Two years later, those 600 seconds were used at the banking royal commission on Wednesday to make a important point: for all their talk about rewarding good behaviour, bank boards punished top executives only when they got caught. Play...
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Commonwealth Bank internal audit team raised 18 red flags The Australian 11:00pm November 21, 2018 Ben Butler   Australia’s biggest bank, Commonwealth Bank, has 18 “red” — unsatisfactory — audits outstanding, covering almost every area of the company from its compliance with anti-money-laundering and counter-terror financing laws through its mortgage broking subsidiary Aussie to problems with the SWIFT system used to transfer money between banks, documents tendered to the financial services royal commission reveal. Details of CBA’s audit woes are laid bare in a confidential paper prepared for a meeting on October 23 of an executive committee set up by new chief executive Matt Comyn to deal with non-financial risks by the bank’s internal audit and assurance team. The audit team said CBA’s anti-money-laundering and counter-terror financing (AML/CTF) program was “rated red, reflecting the significant number of issues already known to management and the additional issues found by Group Audit &...
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Banking royal commission: Westpac's Brian Hartzer doesn't know how much to repay Australian Financial Review Nov 21 2018 8:00 PM James Frost   Westpac chief executive Brian Hartzer said the bank was unable to quantify what proportion of a billion dollars in fees it will have to repay customers who were charged with services they never received, because the records were so poor. The admission at the Hayne royal commission has cast fresh doubt on the viability of the integrated model that sees banks provide financial advice and investment products with Mr Hartzer admitting the challenges were mounting. Mr Hartzer revealed that the bank was working on establishing a rule of thumb for refunds to customers of financial advisers who worked under the bank's licence but were not salaried employees. Mr Hartzer agreed that poor record keeping had made the process difficult. "We've been in discussions with ASIC and one of...
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CBA CEO Matt Comyn shifts blame to former execs Australian Financial Review Nov 19 2018 9:45 PM James Frost   Commonwealth Bank CEO Matt Comyn has shifted responsibility for the delay to stop selling dud insurance policies to the former CEO Ian Narev and former head of wealth management Annabel Spring, the Hayne royal commission has heard. Mr Comyn said he had been aware the controversial insurance products could pose a big problem for the bank for years through engagement with ASIC and conversations with CBA's former head of retail banking Ross McEwan, who oversaw growth of the product in Australia. "I am not trying to be flippant ... his advice to myself as I recall, Mr Narev, Ms Spring, is quite clear – stop" Mr Comyn said. Mr McEwan left CBA to run Royal Bank of Scotland. RBS was one of a number of banks caught up in the misselling...
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Quietly one arvo the Aussie property bubble burst MacroBusiness12:15 am November 20, 2018 David Llewellyn-Smith   Game over. Via ABC coverage of CBA CEO Matt Comyn at the Hayne Royal Commission yesterday afternoon: Rowena Orr has moved on to CBA’s own lending practices, particularly its extensive use of the Household Expenditure Measure (HEM). For those of you who don’t remember the HEM from the first round of hearings, it is a relatively low-ball measure of household living costs. Banks have used it as either a floor or even default measure of living expenses when they decide how much people can afford to borrow. When the bank regulator APRA ordered a targeted review of major bank lending standards, conducted by PwC, it found CBA used the HEM in 75-80 per cent of loan approvals. Given that the HEM represents the median (middle, or typical) spending on essential items for people in a...
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Call for Hayne to break up the banks Sydney Morning Herald 20 November 2018 12:15am Sarah Danckert   Banks’ self-serving flogging of products to customers should be canned by the Hayne royal commission and they should be broken up, a conference has heard. Nick Sherry, who was superannuation minister from 2007-09 in the Rudd government, said revelations at the banking royal commission showed that many of the superannuation trustees for big banks were not working in the best interests of members in the funds. “What I find a little startling is the culture of many who participate in this sector who believe it is appropriate to maximise the clip-the-ticket fee approach. Is that consistent with the fiduciary duties for a trustee?” Mr Sherry asked the Maurice Blackburn Corporate Conduct and Class Action Symposium in Sydney on Monday. “I despair that we still have trustees in my view failing to exercise their...
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If you are a paid up member of BFCSA are three snippets of what you receive as a newsletter. You cannot afford to miss out:   APRA knew in 2003 report Howard Govt gave GREEN LIGHT to Bankers re SUB PRIME Lending   Our Next Battle will be compensation cases and class actions. This can only happen when Labor holds #ALPBankRCmk2 Documents lawyers need are to be discovered in the dungeons of ASIC and APRA. Neoliberalism follower John Howard – turned consumer protection into a watered down older version of BUYER BEWARE and why Major Banks were given the GREEN LIGHT for Low Docs which are sold at the rate of 80% of their Loan Books since 1999. APRA wrote a tell-all 9 page document in 2003 explaining the plan, put together by Howard, Costello and Turnbull (Mr Goldman Sachs) between 1999 – 2000 and explained in a full 365...
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Banks’ sinister tactic:     Using the legal system ‘as a weapon’   “YOU’LL never beat the bank.” https://www.news.com.au/finance/business/banking/banks-sinister-tactic-using-the-legal-system-as-a-weapon/news-story/9fb85de4294d862415d1ea093caac085 That was the last thing one victim of banking misconduct wanted to hear, least of all from their own lawyer. But there was plenty of truth behind the ominous warning. Today Labor is releasing its submission to the Financial Services Royal Commission’s interim report, based on 14 roundtable discussions it has held with victims across Australia. It has found that banks ruthlessly use the legal system to force their customers into long, costly battles they can’t afford. “The legal system is being used as a weapon against us,” one roundtable participant said. Many described the hopeless situation of being issued with a default notice and then facing top solicitors in court without adequate legal representation. On top of the obvious problem — it’s hard to pay for a good lawyer when you’re already...
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ASIC lacks courage on enforcement says former investigator By Mark Solomons  28th April, 2018 https://www.smh.com.au/business/banking-and-finance/asic-lacks-courage-on-enforcement-says-former-investigator-20180425-p4zbn0.html A former senior investigator at Australian Securities and Investments Commission has accused the regulator of lacking the "balls" to prosecute white-collar crime and criticised successive governments for poor appointments in the people chosen to run the organisation. Barrister Niall Coburn, who spent a total of 13 years at ASIC in two stints between 1992 and 2012 and led high-profile criminal investigations, told Fairfax Media he had repeatedly warned his bosses they needed to take a harder line but was ignored. “The basic thing is they haven't got the balls. My bosses never had the balls to bring proceedings and if you were outspoken you were basically shut down and isolated," he said. The criticism comes after ASIC has faced questions, including from Treasurer Scott Morrison, over its approach to enforcement in the wake of evidence at the Hayne...
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Ripoll hits out at banks' 'corrupt culture and greed at highest levels' https://www.smh.com.au/business/banking-and-finance/ripoll-hits-out-at-banks-corrupt-culture-and-greed-at-highest-levels-20180927-p506fe.html By Sarah Danckert, Jessica Irvine & Clancy Yeates  28 September 2018    The Hayne royal commission has blasted the banking sector as being driven by greed and dishonesty and policed by an ineffective watchdog sparking calls for immediate reform. Despite several searing observations about banking misconduct during the first four rounds of hearings Commissioner Kenneth Hayne's interim report has stopped short of making any findings or recommendations. "Hayne has left no doubt as to the corrupt culture and greed that exists in our banks and institutions at the highest levels," said former Labor MP, and prominent reform campaigner, Bernie Ripoll. "It is about time that those entrusted to hold the most senior of positions and paid so extraordinarily well also hold themselves responsible for what Hayne has painfully uncovered." Commissioner Hayne said in the report -- which covered hearings into into mortgages...
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Big four scandal costs top $1.3 billion   https://www.smh.com.au/business/banking-and-finance/nab-flags-extra-314m-in-customer-remediation-costs-20181016-p509v3.html    Clancy Yeates  16 Oct 2018  The big banks have set aside at least $1.3 billion to cover the cost of a string of scandals for the latest financial year, and some predict they will face higher charges in the year ahead, as lenders pay the price after a slew of compliance failures. National Australia Bank on Tuesday became the final big bank to release details of the hit to its profits from scandals being scrutinised by the Hayne royal commission, announcing a new provision of $314 million relating mainly to customer compensation costs. The provision centres on failings in its wealth management business, and is for the financial year that ended on September 30. UBS analyst Jonathan Mott said the charge implied NAB would have a dividend payout ratio of 96 per cent if it kept the dividend flat at 99¢ a half, and...
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Commonwealth Bank executives jeered by customers in parliamentary hearing Chief Matt Comyn apologises for bank, admitting CBA wrong to oppose royal commission https://www.theguardian.com/news/2018/oct/11/commonwealth-bank-executives-jeered-by-customers-in-parliamentary-hearing Commonwealth Bank executives were jeered by aggrieved customers on Thursday during an appearance before a parliamentary committee where they conceded there had been failures of leadership and greedy behaviour at the bank. Matt Comyn, CBA’s chief executive, and David Cohen, CBA’s chief risk officer, were appearing before the House of Representatives standing committee on economics in Parliament House to respond to revelations from the banking royal commission. Multiple transgressions by CBA, stretching back years, have been revealed in the banking royal commission, including charging dead clients for financial advice, and charging customers fees for services that never materialised. Follow the money: retail superannuation funds face day of reckoning     Read more Thursday was the first time Comyn had appeared before the parliamentary committee since the royal commission hearings began...
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Small business blames 'real tightening' in credit on the banking royal commission Australian Financial Review Sep 23 2018 9:00 PM John Kehoe   Small business says it is facing a credit crunch and is blaming the royal commission into financial services for causing nervous banks to slow lending to the self-employed. The moderation in lending to small firms in recent months appears to be an unintended consequence of anecdotal evidence of questionable bank lending practices uncovered by Kenneth Hayne's inquiry. The royal commission's interim report is due to be released on Friday. Council of Small Business of Australia chief executive Peter Strong said: "We're hearing from our members credit from the banks is becoming much harder to get because of the royal commission." Fewer and smaller loans to small firms could slow economic growth. The Reserve Bank of Australia has said that access to finance for small businesses is important because...
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S&P upgrades outlook on Australia on surplus prospects Australian Financial Review Sep 21 2018 4:01 PM Patrick Commins, John Kehoe   Global ratings agency S&P has upgraded the outlook on Australia's AAA credit rating to "stable" and says it expects the combined federal and state budgets will return to surplus by the "early 2020s" thanks to a strong job market and high commodity prices. Treasurer Josh Frydenberg has already signalled the federal budget may return to balance before the 2019-20 forecast. Final accounts for last financial year are due to be released as soon as next week, though a narrowing deficit is still expected for 2017-18. Separately, Mr Frydenberg said on Friday that S&P had provided a "strong endorsement" of the government's finances and that Australia was one of only 10 countries to have a AAA rating from all three agencies. However, the Treasurer declined to commit to offset with new...
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Banking royal commission: Insurers could face criminal charges Australian Financial Review Sep 21 2018 6:59 PM James Frost   The royal commission has heard a host of insurers have systematically broken laws, many of them carrying criminal penalties, in an explosive final day of hearings on the insurance industry. The open findings were delivered to the Hayne royal commission on Friday afternoon and were made even more embarrassing when Financial Services Council chief executive Sally Loane was unable to answer general questions about the industry and developments in relevant markets. In response to a question about the code of conduct Ms Loane said she didn't know. "As I said, I'm CEO. I have a lot of people on my staff." Counsel assisting the commission Rowena Orr, QC, presented the damaging findings, saying it was open to commissioner Kenneth Hayne to find evidence of insurance companies acting unconscionably, making false and misleading...
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'Stop being bastards': how the royal commission could reform banks Sydney Morning Herald 22 September 2018 12:00am Jessica Irvine   Graeme Samuel is in no mood for beating around the bush. Australia’s former competition tsar, now a professorial fellow at Monash Business School, recalls a meeting with bank executives, in which they quizzed him on how to stop the relentless public mantra of “banks are bastards”. “The first thing I said was: ‘stop being bastards’,” Samuel told Fairfax Media this week, reflecting on six sensational rounds of public hearings of the royal commission into misconduct in the financial services sector which, he says, revealed “horrific” case studies and examples of “crass stupidity” by executives. “Some of us who have been in public service and dealing with these companies look at it and say what is going on?” Earlier this year, Samuel was part of a high level trio – including the...
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