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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Phil Khoury first up at bank inquiry as spotlight turns to small business lending The Australian 12:27pm May 16, 2018 Richard Gluyas   After his kind offer to help AMP renew its board, perhaps with a little more zeal than the company anticipated, financial services royal commissioner Ken Hayne now turns his attention to bank lending to the small- and medium-sized business sector. The show kicks off on Monday and continues until the close of business on Friday, June 1. As with the previous round of hearings on financial advice, some initial scene-setting rules out the prospect of immediate fireworks. The word on the street is that the first witness in the box on Monday morning will be Phil Khoury of the governance and accountability advisory group Cameron Ralph Khoury. Khoury is best known for his review of the Code of Banking Practice for Anna Bligh’s Australian Banking Association. The new...
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Banking royal commission: JPMorgan fears big job losses The Australian 8:50pm May 14, 2018 Michael Roddan   There are renewed fears of economic fallout stemming from the royal commission into the banking sector, as regulators and the government look to overhaul the way fees are paid across the financial services sector. A crackdown on financial advice — including killing off problematic trailing commissions that were grandfathered in 2013 — could end a significant money spinner for the largest banks and wealth managers as the fallout from the royal commission continues to build. JPMorgan analyst Sally Auld said the financial sector could face a stunning crash in employment worse than the last ­financial crisis. “The finance and real estate sectors now represent 12 per cent of GDP,” Ms Auld told investors. “Together, these sectors have been growing above their long-term trend, so some consolidation seems likely. “Employment in these industries could contract...
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About 8200 will be ‘sleeping rough’ tonight The Australian 12:00am May 15, 2018 Rick Morton   The number of people sleeping rough or living in insecure housing in NSW jumped 37 per cent in just five years, almost triple the rise of Queensland, the second-worst state according to analysis by independent researchers. While homelessness fell 11 per cent in the Northern Territory, the housing crisis worsened in Darwin, where the number of homeless soared 36 per cent. The snapshot, commissioned by community agency Launch Housing and written by Univer­sity of NSW and University of Queensland researchers, measures homelessness as those sleeping on the streets, in overcrowded housing or with no secure, permanent shelter. About 116,000 people are homeless in Australia and of these about 8200 “sleep rough”. Between the 2011 and 2016 censuses, the nation’s population grew 9 per cent but homelessness rose 14 per cent, affecting some groups, especially indigenous...
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CBA finance chief Rob Jesudason’s exit makes Matt Comyn’s job harder The Australian 12:00am May 15, 2018 Richard Gluyas   The revolution under way at Commonwealth Bank has many dimensions, not in the least the sixth vacancy in the executive leadership team created by yesterday’s announcement that chief financial officer Rob Jesudason will return to Hong Kong to join a blockchain company. Suffice to say that new chief executive Matt Comyn is not happy with the way events have panned out. He believes he secured a verbal commitment from the CFO that he would stay in his post for a reasonable period after the CEO changeover from Ian Narev, perhaps towards the end of the calendar year. Jesudason, who was briefly an internal candidate to succeed Narev, is understood to have informed Comyn on Friday of his plan to join the blockchain company Block.one. Any prospect of working out a notice...
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  After Malaysian election, another royal commission beckons for ANZ Australian Financial Review May 14 2018 10:00 PM Myriam Robin   While the cause of much jubilation in Malaysia, we doubt the election of Mahathir Mohamad last week was treated as good news at ANZ. If the new government follows through on election promises, and there's no reason to think it won't, it will likely drag ANZ's top brass to face yet another royal commission. And we thought Hayne's was plenty to be going on with! Between 2011 and 2013, $US4 billion disappeared from the sovereign wealth fund 1MDB, and turned up in "investments" ranging from the movie that made Jordan Belfort the poster boy for trading floors everywhere to a $300 million, 90-metre superyacht. With the scandal still causing outrage, and probes having been quashed by the old government, the Pakatan Harapan coalition ran on a policy of enacting a...
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Billion dollar squeeze on state budgets as property markets slow Australian Financial Review May 13 2018 11:45 PM Duncan Hughes   The Victorian and NSW governments are bracing for a multibillion-dollar slowdown in tax receipts as lower property sales and slower price growth squeezes stamp duty receipts, analysis of government documents shows. Both states' Treasuries are warning their governments they might have to tighten their belts after nearly seven years of tax windfalls filled their coffers, the analysis shows. In Victoria, stamp duty, or land transfer duty, is expected to grow 3.8 per cent to $7.1 billion in 2018-19. By contrast, the $6.8 billion haul expected for 2017-18 represents an 11 per cent increase on the previous year. Over the forward period the growth is expected to average 3.2 per cent. In NSW stamp duty receipts are falling below official mid-year forecasts as rising costs, a crackdown on interest-only lending to...
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'You can't regulate for culture': next AMP chair David Murray Sydney Morning Herald 12 May 2018 12:15am Clancy Yeates   The next chairman of troubled wealth giant AMP, David Murray, maintains that improving the cultural problems plaguing the financial sector will not be achieved by regulation alone. The royal commission has exposed wide-ranging misconduct within the industry, including customer rip-offs and the provision of dodgy financial advice, which has led to expectations the sector will inevitably face further regulation. After another bruising week for AMP,  which has faced a revolt from its shareholders as three directors said they would step down, Mr Murray said he thought the key to improving culture in the industry was to promote clear systems of accountability within companies, and he remained opposed to "regulating for culture". Mr Murray was appointed to be the next chairman of AMP last week, days after former chair Catherine Brenner stepped...
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Marty Cohen: the man behind CBA’s sales culture unveiled michaelwest.com.auMay 11, 2018 Michael Sainsbury A different version of this article also appeared in Crikey. Michael Sainsbury is a freelance journalist based in Asia with more than 20 years’ experience writing about business, business politics and human rights across Australia and the Asia Pacific.   “Rah-rah-style motivational forums” and a $40 million chit for US consultant Marty Cohen helped to shape the aggressive cross-selling Commonwealth Bank sales culture which led, in part, to the customer disaster now unfolding at the banking Royal Commission and billions in losses. Michael Sainsbury reports. The Commonwealth Bank shifted to an increasingly profit-driven services model promoted by an eccentric US management group which drove almost its all staff – from salespeople to risk managers and even auditors – to discover new leads for sales. When the Commonwealth Bank employed New Zealander Ralph Norris, they clearly weren’t concerned...
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Cocaine, girls, million-dollar fraud: What the Commonwealth Bank lender did next The Age 11 May 2018 10:46pm Chris Vedelago & Cameron Houston   [Click here for the online article (non-paywalled as at 8:20 AM), which includes additional quotations in a graphic format that would not copy into this document, along with links to audio recordings. –RJB] A Commonwealth Bank loans officer who perpetrated a $3.5 million fraud on the bank and spent up big on cocaine, "lots of girls" and fine dining, was never reported to police, allowing him to continue working in the financial services sector. Former Melbourne-based mobile lender George Vrettakos told the bank that others were implicated in his behaviour but the bank appears to have never followed up the information he provided. Mr Vrettakos exploited weaknesses in the bank’s internal systems, starting in 2008, to create fake loan accounts that he used to purchase a million dollar...
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Banking royal commission: Financial advisers hit back at allegations The Australian 12:00am May 12, 2018 Ben Butler   Financial advisers criticised for providing shoddy advice or failing to act in the interests of clients during the banking royal commission have hit back in submissions to the inquiry. Former Westpac planner Andrew Smith, former ANZ planner John Doyle, celebrity adviser Sam Henderson and Dover boss Terry McMaster — who collapsed in the witness stand while giving evidence to the inquiry — deny most of the allegations made against them during hearings last month. Mr Henderson’s advice shop, Henderson Maxwell, hit back at suggestions by counsel assisting the commission, Rowena Orr QC, that it had committed a crime by telling investors he possessed a qualification he did not and by failing to declare his shareholding in a company that administered funds he recommended to clients. His behaviour in giving advice to Fair Work...
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Whistleblower reveals more unethical behaviour inside AMP Australian Financial ReviewMay 10 2018 11:00 PM Chanticleer   AMP's record-high negative 61 per cent vote against its remuneration report is the least of the wealth manager's worries when weighed against the prospect of the company's core advice business disintegrating. The securities regulator could put the last nail in the AMP advice coffin with its planned ban on grandfathered commissions, which form the majority of revenue for AMP's financial planners. It is clear from the treasure trove of documents uncovered by the Hayne royal commission that AMP's advice business is riven with immoral and unethical conduct and needs to be disposed of. It is extraordinary that this conduct has been going on for years right under the eyes of managers who have been unwilling to put a stop to it. Chanticleer discovered how bad the situation has been during an interview with an AMP...
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CBA faces mounting costs as financial scandals bite The Australian 12:00am May 11, 2018 Michael Roddan   The verdict on the challenges faced by Commonwealth Bank is that things will probably only worsen from here, with legal bills and spending on overhauling the lender’s compliance frameworks continuing to expand. CBA this week revealed that the litany of scandals rocking it have started to bite as the nation’s largest bank disclosed a drop of almost 10 per cent in quarterly profit amid signs more borrowers were falling behind on their mortgages. “This is the first time we have seen a major bank comment on the impact from pressures on household cash flows,” UBS analyst Jonathan Mott said. CBA shares yesterday fell for a second day — wiping more than $4 billion from the bank’s market capitalisation — as investors digested the surprisingly weak results. The bank said expenses increased by 3 per...
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Banking royal commission: Pressure to break up banks as Treasury, ASIC lash model The Australian 12:00am May 11, 2018 Michael Roddan   The corporate watchdog and Treasury have laid out stinging criticisms of vertically integrated financial players in responses to the royal commission that raise the pressure to break up Australia’s largest banks. Treasury told the royal commission into financial services that the second round of hearings had made it “clear” that poor culture and misaligned incentives were the “key cause” of misconduct, and said there were many benefits that could come from the major banks splitting up their financial advice and wealth management arms. In a cache of submissions to commissioner Kenneth Hayne, and released last night, banks and regulators had been asked to justify the entangled cross-ownership of businesses and address issues such as conflicted remuneration for financial advisers, the shunting of customers into in-house ­products and the breakdown in...
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Federal budget 2018: ASIC's shock $26m budget cut Australian Financial ReviewMay 9 2018 11:00 PM Patrick Durkin   EXCLUSIVE  The corporate regulator's permanent funding will be cut from $346 million to $320 million and staff numbers slashed by 30 investigators, in a unheralded budget cut described as shocking by insiders as the Hayne royal commission adds to the regulator's workload. Tuesday's budget also includes cuts for the Office of the Director of Public Prosecutions - from $77.4 million to $73.75 million in two years - and for the Australian Federal Police from $1.03 billion to $926 million in four years. Labor MP Matt Keogh said the cuts prove Treasurer Scott Morrison is "all bark and no bite" when it comes to fighting corporate crime. Mr Keogh said the cuts amounted to a 23 per cent reduction in staff at the DPP from 2010. Mr Keogh said the agency cuts were separate...
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Interest-only rates slashed as APRA ends investor loan growth cap Australian Financial Review May 9 2018 10:21 AM Duncan Hughes   Rates on interest-only investment loans are being slashed by up to 30 basis points following APRA's decision to lift lending caps on borrowers, triggering speculation that other lenders will start reducing investor rates in a bid to stimulate demand and boost profits. Real estate companies and developers are hoping the move will reverse the investment lending plunge that has caused new borrowing to plunge nearly 18 per cent from market highs. "This is what the market has been waiting for," said Steve Lusi, a director of Direct Property Group, a Melbourne-based real estate agency. "This will make investors a lot more confident about property and means they are not being penalised. Other lenders are expected to follow in a bid to rebuild net interest margins hit by falling investor demand....
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Commonwealth Bank says home loan arrears are ticking higher Australian Financial Review May 9 2018 12:21 PM James Eyers   Commonwealth Bank's shares are trading down heavily on Wednesday after it released a market update showing weaker-than-expected revenue and costs over the third quarter. CBA said its unaudited cash profit was $2.35 billion for the quarter to March 31, which missed analyst expectations by 8 per cent. The nation's largest lender also said more of its customers are doing it tough, with the number of borrowers behind in their mortgage repayments rising slightly and more "troublesome exposures" appearing over the third quarter. The market honed in on growing costs and softer revenue, as treasury and trading income fell along with fees from credit cards. "Overall, today's update is disappointing," said Deutsche Bank analyst Anthony Koo. CBA shares were down 3.2 per cent, or $2.33, at $71.17 just after midday AEST on...
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Young, pregnant and homeless: Hobart’s rental market at breaking point Hack (ABC) 30 April 2018 5:54pm Shalailah Medhora   Rachel and her partner, Harley, are expecting a baby in October. But they’ve got nowhere to live, so for now they’re camped out in a tent at Hobart Showground. The tent has three rooms. Right now, one is being used as a storage room. It’s crammed with bags and boxes. Soon, it’ll be the baby’s room. “This is a storage room until we turn it into a baby nursery. Which is not really good in a tent,” Rachel told Hack. Despite her circumstances, Rachel is upbeat. “I’ve got my own fridge. And I’ve got power which I’m allowed to have, which I’m pretty thankful for,” she said. As winter nears, temperatures plunge. The average temperature for May is around 15 degrees celsius. Rachel’s lived through a winter here before, and she’s not...
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Report reveals terrible scale of Australia’s housing crisis Red Flag08 May 2018 Chris Anderton   Fewer than 6 percent of all rental listings in the country are affordable for those living on income support payments, according to Anglicare’s annual Rental Affordability Snapshot. The scale of the crisis is alarming, and particularly severe in Sydney, where only 57 out of more than 18,000 private rental properties surveyed – less than 1 percent – were found to be affordable for those on income support. The report notes that, for those on Newstart or Youth Allowance, it would be “almost impossible to find an affordable home anywhere in Australia, whether regional or metropolitan”. Avery, a single parent with two kids living in Sydney’s west, rents a one-bedroom granny flat from her aunt and divides it with a bookcase to give her kids a separate space. “I have a casual job but it is only...
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Commonwealth Bank and ASIC to settle interest rate-rigging case ABC News9 May 2018 Stephen Letts and David Chau   Commonwealth Bank has agreed to pay $25 million to settle an interest rate rigging case brought by ASIC. As part of the in-principle settlement, CBA will admit that it engaged in unconscionable conduct, and manipulated the bank bill swap rate (BBSW) five times between February and June 2012. The figure includes a $5 million penalty, a $15 million payment to a financial consumer protection fund, and $5 million towards ASIC's legal costs. The CBA case is one of several brought by ASIC against the big four banks, as well as a number of global investment banks, over their attempts to rig the BBSW. The BBSW is the key rate the market uses to set all other lending rates, such as mortgages and credit cards. ASIC alleged, "CBA traded with the intention of...
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While useless regulators are the current hot topic here’s an article from 2006 to add fuel to the fire     APRA staff unimpressed with senior management By Lisa Murray Sydney 4 May 2006 https://www.theage.com.au/news/business/apra-staff-unimpressed-with-senior-management/2006/05/03/1146335804209.html LESS than a third of Australian Prudential Regulation Authority staff consider themselves "engaged", according to an internal report. The report, by global consultant Hewitt Associates, comes despite APRA paying some of the highest salaries among government-funded organisations and goes some way to explaining its high staff turnover. Only 30 per cent of staff felt "engaged", according to the survey, which was revealed in a report last November and presented to the regulator's three-member board. Hewitt says the result is below the public sector's 43 per cent average, and falls into the "serious zone". The benchmark for the financial services industry is 54 per cent and Hewitt's "best employers" achieve an 81 per cent average. The report...
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