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 bursts in outer ‘burbs The Australian 6:53pm March 4, 2019 James Kirby   Investors hoping to negatively gear new properties are facing a bleak reality, as the latest figures suggest the speculative bubble in outer suburbs housing has popped. Under controversial negative gearing plans announced by Labor, negative gearing will no longer be allowed on existing properties. The ALP, which looks likely to win the May election, aims to restrict negative gearing to new homes, which are predominantly in housing states at the fringes of the major cities. Traditionally, the nation’s residential property investors had not ventured into new housing estates but booming land prices in 2017 lured a range of investors and speculators. Now those investors are facing falling prices and plunging sales volumes in the major capitals. Melbourne, which has been by far the hottest new property market, is facing a dramatic downturn, with a spike in...
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  Macro Business 12:10 am on March 5, 2019 Leith van Onselen   Yesterday, the ABS released dwelling approvals data for January, which revealed that apartment approvals have crashed by 53% since their May 2016 peak: To add further colour, below are charts plotting the breakdown of approvals by type for each of the states and territories, which are presented below in rolling annual terms to smooth volatility.   First, here’s the national breakdown, which shows that detached housing remains the dominant form of approvals, although high-rise (4 or more storeys) had gained significant ground over the past 4-years, but are now collapsing: As you can see, high-rise approvals nationally have fallen 37% since their October 2015 peak, from 78,089 to 49,444, with a nasty downtrend evident.   Below are the charts at the state and territory level:   And finally, here’s the high-rise approvals across the four biggest markets, which shows...
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Suncorp mortgage bond failure ‘a canary’   ·         MICHAEL RODDAN REPORTER ·         12:00AM MARCH 5, 2019 ·         Suncorp has unexpectedly declared a residential mortgage bond worth $120 million may not repay all investors after the share of borrowers in arrears rose to a trigger point, putting the distributions in doubt. The surprise development may be a sign of further stress in the $1.7 trillion mortgage system. It is also believed to be the first local mortgage bond to encounter difficulty since the global financial crisis. CLSA banking analyst Brian Johnson pointed to a combination of borrowers carrying too much debt and rising arrears rates in states such as Western Australia, where unemployment has increased at the same time house prices have fallen, as a possible reason for the announcement. “To get to this point, for a securitisation this old to go bust — that is weird,” Mr Johnson...
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https://www.euromoney.com/article/b1dbg3gn7ppw3p/australia-royal-commission-all-talk-no-action#.XHmY5Ko60ho.twitter Australia Royal Commission: All talk, no action Friday, March 01, 2019 The final report of Australia’s Royal Commission into misbehaviour in financial services had plenty of blood and thunder, and has already brought down the top executives of National Australia Bank, but it doesn’t bring the promise of lasting reform. Early February in Australia had everything.  It had the most uncomfortable photo call in recent memory, as Kenneth Hayne, in handing over his Royal Commission report into banking, declined the requests of the press pack to shake the hand of Australian treasurer Josh Frydenberg.  It had a top banking executive who, at the precise moment of the report’s formal launch, was out selling The Big Issue. It had the ousting of both the chairman and chief executive of National Australia Bank simultaneously. It had everything, in fact, except the promise of genuine reform to the Australian banking system.  The...
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Australia banking: Comyn shafts Narev for the greater CBA good Wednesday, November 21, 2018   "Euromoney"   There's one way to get to the top – rubbish those who came before you.     “Temper your sense of justice.”   That phrase, you can already feel, is entering the Australian vernacular as a shorthand for the complacency of the big banks. It came to light in the latest hearings of the Royal Commission into Australian banking conduct, during the testimony of Matt Comyn, the new chief executive of Commonwealth Bank of Australia. Matt Comyn, CBA Comyn used his testimony to explain how he had, in his previous job as head of retail, lobbied then chief executive Ian Narev in 2015 and 2016 to stop selling some of the products that would later land the bank in enormous trouble with the regulators and the public. Comyn said he repeatedly asked Narev to stop...
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NAB provides mental health hotline for brokers stressed about Hayne review   AFR Duncan Hughes 18 feb 2019   It comes as mortgage brokers are signing on to a mental health counselling scheme that identifies stressed borrowers called "Accidental Counsellor", which is for employees who find themselves in a counselling role by accident. Mr Felton said an increasing number of borrowers are also stressed by falling property prices, rising costs, negative equity and difficulty renegotiating interest-only loans. For example, about 650,000 borrowers with loans totalling about $230 billion are "trapped" in their interest-only loans and could struggle to refinance, forcing many to sell into already deteriorating property markets, according to investment bank Morgan Stanley. The waiting game Mortgage brokers comprise more than 7000 businesses and have 17,720 employees, with revenue of about $2.2 billion and total wages of more about $1.5 billion, according to IBISWorld. Brokers account for about 59 per...
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Westpac the first ASIC case among many more to come   AFR Jennifer Hewitt  18 feb 2019   It still goes directly to the contradictions in the broader argument that financial advice can be both cheap or even free while still containing all necessary protections for customers. Not surprisingly, Westpac's direct mail campaign, starting in 2014, was designed to persuade customers they could save money by rolling over their super into BT products and services. And it worked. Over three years, some $650 million was rolled over into its BT Funds Management arm.  Hayne's recommendations disappointed those hoping for radical structural shifts in the financial services industry by deciding not to back the end of "vertical integration". This allows financial institutions to manufacture financial products and sell them to customers, often via the provision of financial advice. But Hayne decided this level of disruption could not be justified, particularly given the changes already...
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Former NAB CEO Andrew Thorburn forfeits $22 million   AFR James Eyers  20 feb 2019   The bank said Mr Chronican would get a fixed monthly fee of $150,000, or $1.8 million a year — and no variable remuneration — as he moves to fix NAB's woes. Mr Chronican, who starts on March 1, will forfeit his director fees while filling the gap left by Mr Thorburn's departure after royal commissioner Kenneth Hayne chastised group culture under his leadership. In an Australian Securities Exchange announcement on Wednesday morning, the beleaguered NAB said its board had set up two special committees to manage the selection processes for both Mr Thorburn's role and that of chairman Ken Henry. The former Treasury secretary also was pressured to resign, after the commission exposed a gap between leadership rhetoric and aggressive sales practices in NAB branches. Dr Henry will remain in his role until a new...
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NAB's Phil Chronican once again caught in the middle of history   AFR Karen Maley 25 feb 2019   Morgan's biography records that he recommended Kelly for the job, rather than Chronican, who is now acting chief executive of National Australia Bank.  "In my heart, I wanted to give it to Phil," Morgan says in the book. "I felt absolutely wretched about it, actually." Chronican has already signalled he won't be attending the Thursday evening book launch, having arrived in Melbourne on Monday, in preparation for starting his new role. But he could be excused a wry smile as he reflects that, once again, he's been caught up in extraordinary, and unpredictable, circumstances. Senior bankers agree that Ken Henry, who this month announced his decision to resign as NAB chairman, in normal times would already have departed, clearing the way for Chronican to replace him. "It's pretty clear that he's the...
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ASIC wants laws to lock more bankers in jail Penalties legislation that passed Parliament last week mean corporate executives now face maximum jail terms of 15 years for criminal offences and companies are liable for fines of up to $525 million per civil violation. The laws were a step in ASIC's quest to deter rogue conduct by executives. But the laws do not necessarily allow prosecutors to directly go after financiers for certain bad behaviour. Rogue misconduct Instead, ASIC may be forced to pursue rogue actions indirectly through the criminal code for breaches, a more complex prosecution task. Expanding corporate law to cover more areas of misconduct by individuals, not just by financial institutions, would remove obstacles that bankers sometimes hide behind. Directors duties are a potential current avenue, but can sometimes be difficult to successfully prosecute. Before the passage of the recent white-collar penalties legislation, ASIC could legally pursue rogue misconduct...
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Labor to pressure banks into opening old cases "That's an issue that we are obviously going to have to work through in practice in future to make sure that the judgments in court can sit in tandem with any compensation scheme, " Mr Dreyfus said. Ms O'Neil said her dealings with the banks and the financial services sector showed her there was a desire to put things right for customers and did not expect the banks to push back on its recommendations. "I think what has amounted to abuse of the law in court cases in the past is a matter that is of concern to bank CEOs and I do believe there will be instances, in some limited circumstances, where the banks will allow us to look at areas where a manifest injustice has occurred."   Shadow Minister for Financial Services Clare O'Neil said there were obvious issues with revisiting...
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Six former Liberal politicians-turned-ambassadors could be recalled under Labor hit list Sydney Morning Herald March 3, 2019 11.00pm Bevan Shields, Matthew Knott   EXCLUSIVE Politicians given plum overseas postings or lucrative positions on tribunals under the Coalition could have their jobs terminated by Bill Shorten should he become prime minister. The Sydney Morning Herald and The Age have been told Labor has drawn up a hit list of six former Liberal Party MPs currently serving as ambassadors or consuls-general, as speculation swirls that Steve Ciobo – who stood down from cabinet on the weekend after announcing he will not recontest the May election – could be in line for a government job. The Coalition is facing claims of political cronyism following a flurry of recent appointments to overseas positions and the Administrative Appeals Tribunal, where some former Liberal MPs are now commanding salaries of more than $360,000 a year. A Labor...
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Coalition doubles all government debt since Federation in just under six years michaelwest.com.au Mar 2, 2019 Alan Austin   The Coalition has just doubled all government debt accumulated since Federation. In under six years. Alan Austin reports. Australia’s gross debt – updated Friday morning – has just clicked over the magic number of $543,409,430,000. This is exactly double all debt accumulated by every government between Federation and the 2013 election. That’s right. The Coalition has added more debt in five and a half years than all governments over the preceding 118 years. There are three stories here. The first relates to profound fiscal mismanagement, the second concerns political hypocrisy, and the third is about the performance of the mainstream media. The latter is probably the lesson which most urgently needs to be learned. And never forgotten. A brief history Australia had accumulated substantial public debt through the colonial period, well before...
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Bankers’ pay slashed after royal commission revelations The Australian 12:06am March 4, 2019 Adam Creighton   EXCLUSIVE  Top bankers at the big four have suffered a sharp drop in pay as heightened scrutiny from the royal commission, a mounting compliance burden and shareholder rage take their toll on ­bonuses and incentives. The average pay, including bonuses, of the 254 top bankers at the four largest banks dropped almost $300,000 last year to an average of $1.2 million each, the lowest level in at least six years. Average pay of “senior managers” and “material risk takers” — a group determined by banks’ submissions to the regulator — dropped $500,000 to $1.5m at ANZ, $280,000 to $1.8m at Westpac, $230,000 to $800,000 at Commonwealth, and $184,000 to $1.4m at National Australia Bank, according to analysis by The Australian. Tim Nice and Emma Grogan, remuneration experts at KPMG and PwC respectively, said the royal...
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Heavy industry faces carbon caps under Labor Australian Financial Review Mar 3, 2019 11.00pm Ben Potter   Labor is finalising plans to hit heavy industry – from big manufacturers to liquefied natural gas exporters – with strict carbon emissions caps that would work like an emissions trading scheme. The opposition also plans to unveil policies to impose tougher fuel emissions standards on the vehicle industry and land clearing restrictions on farmers to make those sectors do their bit towards Labor's aggressive 45 per cent emissions reduction target in the coming weeks, as the countdown to a federal election due to be held by May 18 gathers pace. Prime Minister Scott Morrison pivoted towards more climate-friendly policies last week as new data showed Australia's annual carbon emissions remain at their highest since 2011, and criticised Labor for failing to explain how they would reach their target for 45 per cent lower emissions...
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Cladding failures: Warnings of combustibility go back to 1990 Australian Financial Review Mar 4, 2019 12.15am Michael Bleby   Australia's building regulators were discussing the dangers of combustible cladding in 2010, but the warnings started much earlier. Canadian researchers were among the first, with a 1990 report titled Fire Exposure to Exterior Walls and Flame Spread on Combustible Cladding. In Australia, testing in 1995 by the CSIRO showed the problem but the first formal publication in this country came in 2000, with the publication of reports by the Fire Code Reform Centre, says fire engineer Jonathan Barnett. "The issue with combustibility of external cladding was recognised in 1990," Barnett says. "The issue should have been recognised from day one." While state and territory building regulators failed to warn industry that polyethylene-core panels would not pass the Building Code of Australia's combustibility requirements, last week's Lacrosse damages case judgment, over the Melbourne...
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Governments failed to act on warnings of combustible cladding dangers Australian Financial Review Mar 3, 2019 11.00pm Michael Bleby   EXCLUSIVE  State, territory and federal governments failed to limit the use of combustible cladding of the type on Melbourne's Lacrosse and London's Grenfell towers, despite repeated warnings from fire authorities as early as 2010. The concerns of ACT fire authorities and their NSW counterparts were discussed at meetings of state and territory building regulators and the Australian Building Code Board, according to documents obtained under Freedom of Information and other court documents. However, regulators did not act, and 100 per cent polyethylene core panels remained on sale with no caution at least until 2013. The documents show regulators and the nation's peak body for building standards discussed the risks of combustible cladding after they were warned, but gave up on any co-ordinated effort to issue a nationwide alert. Instead, the industry...
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  THE POISON THAT IS WITHIN ASIC and from Bank Lawyers read article below from Jon Denovan   In Truth: 1. I handed over 400 documents to the Senators 8 Aug 2012 "Inquiry into Banking Post GFC" 2. I posted Bank emails / LAFs on my website on FP Sept 2012 under "Bankileaks" - still there. 3. Anthony Klan wrote story / Stephen Long placed story on 7.30 report late 2012 4. Parliament Media produce 1 hour CD of my evidence as a witness re RMBS and LAF Fraud $30   5. Senator briefed Medcraft on my evidence of Bank Fraud in late January meeting 2013 6. Medcraft contacted me via email; asked me for those copies. January 2013 7. I insisted on meeting with a Commissioner 8th Feb 2013.  I handed over 3 kg Pack of documents 8. ASIC advised Parliament early 2013 to say Brailey documents of no value 9....
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Hayne inquiry let big banks off lightly: Allan Fels The Australian 4:11PM MARCH 1, 2019 AAP   The big banks got off lightly from the financial services royal commission despite the NAB CEO and chair being offered up as “sacrifices and scapegoats”, a competition expert says. Former Australian Competition and Consumer Commission chairman Allan Fels says there has been a powerful exposure of and condemnation of misconduct from the inquiry. But the economist and lawyer believes the royal commission has not done as well in tackling difficult policy problems. “I thought the banks got off lightly,” Professor Fels told the Melbourne Press Club. “I thought it didn’t get deeply enough into a number of important things.” Prof Fels argued the issue of structural separation - where institutions provide advice and make the financial products they sell - needed a much deeper look. Royal commissioner Kenneth Hayne QC decided it was not...
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Westpac considers appealing Federal court ruling on class action The Australian 12:00am March 2, 2019 Michael Roddan   Westpac has been dealt another blow in its fight against a potential $100 million class action over fee-gouging life insurance after its attempt to block a litigation funder from accessing potential settlement or compensation was dismissed by the Federal Court. Westpac, the nation’s second-largest bank, is considering a potential appeal to the High Court after judge Michael Lee of the Federal Court found the funding of litigation and common fund orders were a legitimate part of access to justice in an important test case for the growing industry of class action funders. The bank took issue with a decision last year when the Federal Court made a pre-trial order that a substantial portion of any future settlement, which might otherwise be paid to customers who partake in the class action, should be instead...
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