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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Westpac claims victory in interest rate rigging case Australian Financial ReviewMay 24 2018 7:39 PM James Frost, Patrick Durkin   The corporate regulator has failed to prove Westpac manipulated the bank bill swap rate with the Federal Court finding that while the bank had acted unconscionably the trades did not amount to market manipulation. Justice Jonathan Beach rejected the Australian Securities and Investment Commission's central case that Westpac had engaged in market manipulation in setting the bank bill swap rate (BBSW), a key benchmark interest rate in Australian financial markets. ASIC's landmark case launched by former chairman Greg Medcraft in 2016 follows decisions by the ANZ, CBA and NAB to settle similar cases for a total of $125 million. ASIC was emboldened by the successful actions of regulators against global banks for rate-rigging which have raised more than $US9 billion. Justice Beach accepted that while Westpac traders acted in four cases...
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AMP to take a hit on super fee cap on low-balance accounts The Australian 12:00am May 26, 2018 Michael Roddan   Wealth major AMP faces a hit to almost $100 million in fee revenue it generates annually across hundreds of thousands of low-balance super accounts that are mostly made up of forgotten or lost super funds. AMP has emerged as one the most vulnerable to a shake-up outlined in this month’s federal budget, which seeks to slash fees charged on ultra-low balance super funds. Although the government’s incoming halt on the fee gouging will punish the $2.5 trillion retirement savings sector, the measure is another hit to the pressured business model of AMP, which is among the nation’s largest superannuation managers with $118 billion under management. Proposals announced by Financial Services Minister Kelly O’Dwyer will from July next year limit fees charged on super accounts with balances under $6000 to a...
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Suncorp pressures customers to pay back irresponsible loans first Australian Financial Review May 25 2018 6:15 PM James Frost   Suncorp has defended a practice of attempting to recover the balance of bad business loans within 12 months, even after they were deemed irresponsible by the Financial Ombudsman Service. Suncorp's banking and wealth chief executive officer David Carter revealed to the Hayne royal commission that approach was widely used when he was asked to explain the bank's rigid approach to recovering one couple's $1 million in debts spread across five loans. The loans were granted to Mr Peter and Mrs Jennifer Low of Healesville and following Peter's unexpected death in a workplace accident, the Low family attempted to work with the bank to resolve the outstanding debts on which interest was accruing at a rate of $1200 a week. Following a lengthy and unsuccessful attempt to resolve the situation with the...
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Westpac’s decision to keep $100,000 ‘an abuse of power’ Australian Financial Review May 25 2018 5:31 PM James Frost   Westpac's decision to deny a customer's access to $100,000 of their own funds was inappropriate, unfair and an abuse of power the Hayne royal commission has heard.  Small business lenders at the Bank of Melbourne pushed through a loan for a commercial enterprise as a residential mortgage in order to meet sales targets and secure a bonus. That decision set off a chain of events that would lead the bank to place a "hard hold" on a customer's funds in a term deposit held by the bank some years later. Counsel assisting the royal commission Rowena Orr, QC, said the bank took advantage of the customers who needed to discharge the mortgage on one property in order to acquire a family home and start a new life on the Gold Coast....
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BBSW enters new era after Westpac ruling Australian Financial Review May 25 2018 11:00 PM Jonathan Shapiro   The guardian of Australia's key benchmark bank bill swap rate says the new rate setting process, which went live just days before the Federal Court judged Westpac to have engaged in unconscionable conduct, is working as intended. "There are multiples of transaction volumes we need. Market participants have worked really well to move to the new rate set window," the Australian Securities Exchange's Helen Lofthouse told AFR Weekend. The official move to the new system that sets the bank bill swap rate (BBSW) for different maturities from overnight to six months based on a volume-weighted average price of trades from banks and other participants, such as fund managers, went live on Monday. It comes as regulators globally move to reform the way they set key interest rate benchmarks so they are less susceptible...
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Westpac parts ways with Colin 'The Rat' Roden but sticks by other BBSW traders Australian Financial Review May 25 2018 11:00 PM Patrick Durkin   Westpac has parted ways with its top trader Colin "The Rat" Roden but is expected to rally behind other top executives, including group treasurer Curt Zuber, in the wake of the Federal Court's decision the bank acted unconscionably but failed to manipulate the bank bill swap rate. The big four banks also plan to use the decision by Justice Jonathan Beach on Thursday that Westpac failed to manipulate the BBSW, and the judge's finding that it was impossible to prove customers suffered any loss, to seek to dismiss a major US class action launched against the banks over BBSW. The AFR Weekend has learnt that Mr Roden – the star witness paid millions in bonuses to "f--- the rate set" – stayed with the bank until...
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Australia’s shadow banking Ponzi scheme The Australian 12:00am May 26, 2018 Alan Kohler  BEWARE: Australian Elites Shadow Banking Ponzi scheme. Negative Gearing a hidden VILLAIN Non-bank lending in Australia is really big. How big? No one knows, although moves are afoot to find out — next year. Australia’s version of shadow banking is based on four things that are special to this country — first, the fact that virtually all residential development is “build to sell”, as opposed to “build to rent”, as it is in the United States; negative gearing; the retreat of the banks from ­financing property development; and finally, immigration — lots of it. In the absence of the banks, a huge industry has developed to funnel yield-hungry high-net-worth individuals’ and family office money into property development outside the banking system. For most wealthy people, if not most people, the idea of putting money on bank term deposit at...
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Alarm banking royal commission fallout will push borrowers into shadow banking Australian Financial Review May 25 2018 11:00 PM Jacob Greber, James Eyers BANKS HAVE NO STRICT STANDARDS. NO POLICING. BANKING HAS BECOME UNTRUSTWORTHY UNREGULATED FREE FOR ALL!! BUT STAY AWAY FROM NON BANK LENDERS Concerns are growing the bank royal commission could crimp bank profits and lending, pushing small business borrowers to the new high tech finance sector, where some are charging more than 40 per cent interest rates. Moody's has issued a warning the Hayne inquiry could result in tougher regulation, which could slow economic growth by reducing the availability of credit. It described the credit implications of the commission as "negative" for the major banks. "The increased focus on bank lending practices could lead to a tightening of mortgage underwriting which could weaken credit growth and profitability," said Daniel Yu, a senior analyst at the agency. Their caution...
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ROYAL COMMISSION: MISCONDUCT IN BANKING, SUPERANNUATION and FINANCIAL SERVICES INDUSTRY The Royal Commissioner Kenneth Hayne 16th March 2018,               Denise L Brailey – President of BFCSA (Inc)   BFCSA is a significant consumer group in Australia, examining cases in relation to mortgage fraud.   We delve into actual case files of customers who have experienced bank mortgage fraud and unaffordable lending.  Our members come from every state in Australia.  When people join our group, they have no idea what the fraud is. Over 70% of borrowers do not realise they have an Interest Only Loan.  All complaints relate to (“IO”) Loans. Since 2001, regulators have ignored customer concerns regarding bank internal calculators and the fraudulent approval processing of loans.  Our research into actual consumers files has revealed that every Loan Application Form has an income altering “Serviceability Calculator” attached, and many errors relating to personal information.   Borrowers are unaware of the...
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Westpac rate conduct "ran counter to obligations"  Friday, 25 May 2018 7:28am  Ian Rogers  Finance regulation     https://www.bankingday.com/nl06   Westpac was in breach of its obligations under its financial services licence at times in 2010 and also held to have engaged in unconscionable conduct in the bank bill market, the Federal Court of Australia ruled yesterday. The bank has evaded any adverse findings regarding ASIC's allegations of market manipulation or market rigging, and also deflected allegations of misleading or deceptive conduct. In a colossal, 650 page ruling yesterday, Justice Jonathan Beach rejected the majority of claims made by the Australian Securities and Investments Commission against Westpac. The bank faces penalties guessed to come in somewhere around the A$5 million mark for its misconduct, an amount that is around half the level of the penalties paid by ANZ and NAB on corresponding allegations raised by ASIC that each bank settled out of court....
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Why are banks so afraid to call a loan to small business a loan? The Australian 12:00am May 24, 2018 Ben Butler   Bankers called it “supporting small business”, but a better phrase might be “lending money for profit”. There’s nothing wrong with banks wanting to make a return on the money they lend out. If they didn’t, they would soon collapse, which begs the question: why were the executives in the witness stand at the royal commission apparently so afraid to call a loan a loan? Instead, witness after witness spoke of “support” or “backing” as if lending was a public service rather than an attempt to make money. Small business has made it clear it doesn’t want the flow of money to dry up. But flogging more than eight products to every customer? This was “supporting customer needs”, Westpac’s Carol Separovich told the commission. It was also what, in...
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Banking royal commission warned rigid lending would lead to economic gridlock Australian Financial Review May 23 2018 7:00 PM James Frost   Westpac and ANZ drove home the consequences of rigid credit rules on Wednesday as the Hayne royal commission was forced to weigh up the impact of tighter lending on economic growth. The banks sought to explain how it was rarely a case of one-size-fits-all with small businesses and why they disagreed with the Financial Services Ombudsman's interpretations of their responsible lending obligations. Treasurer Scott Morrison weighed in, warning any decision to "just throw more regulation" at the problem would carry the risk it "basically constipates the banking and financial industry", leading to fewer jobs and harder to acquire home loans. The tension between the ombudsman and the banks on how to maintain a balance between protections and a healthy economy has been teased out in advance of Thursday's highly...
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Mass financial adviser exodus puts $900 billion in play Australian Financial Review May 23 2018 11:00 PM Alice Uribe   EXCLUSIVE  A mass exodus of financial planners over the next five years will put $900 billion of client wealth in play as the reality of tougher educational standards and the fallout from damning royal commission revelations set in. The stunning shift in the industry is a key finding of a report by Adviser Ratings, which revealed 57 per cent of advisers, numbering 14,000, will seek to exit the sector on the back of what the 100-page reports calls "significant disruption". Angus Woods, the managing director of Adviser Ratings, a consumer group set up in the wake of the Future of Financial Advice (FOFA) reforms, said regulatory reforms that may come out of the royal commission's focus on vertical integration – the pushing of own products by company-aligned advisers – would further...
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Philip Lowe on why the RBA is watching China's debt mountain so carefully Australian Financial ReviewMay 23 2018 9:12 PM Jacob Greber, Lisa Murray   Reserve Bank of Australia governor Philip Lowe has appealed for calm over Australia's increasingly troubled political relationship with China, while warning that its ballooning debt mountain and opaque financial system pose a threat to prosperity here. Seeking to take heat out of the debate over China's role in Australia, Dr Lowe said it was important to build understanding, connections and multiple lines of communication. He said while every relationship had its ups and downs, "I do think it's important that we avoid escalating issues when they arise." In a speech on Wednesday night Dr Lowe detailed his concerns over China's banking system, which he says is the most likely source of an economic shock. "Not surprisingly, this risk has become a priority of the Chinese authorities...
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Concern for customers the key to NAB’s success The Australian 12:00am May 23, 2018 Ken Henry   I have been asked to talk about the political and economic state of the nation: the big picture. NAB’s purpose is “to back the bold who move Australia forward”. That’s our big picture. Our purpose drives the bank. It is intended to motivate everybody in it. And our 33,000 people are ambitious for Australia’s future. We want to be bold. We want Australia to move forward. The political and economic state of the nation therefore matters to us deeply. But my focus today is not the performance of the nation’s political system, but one of the most important issues confronting us right now: the role of business, particularly big business, in society. The leaders of our large businesses have never been under greater scrutiny. All of us have a fair idea of the reasons...
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It was common practice for Westpac bankers to fill out loan documents with false information, one of the bank’s senior executives has told the financial services royal commission. Evidence at the commission yesterday showed Westpac relied on a rat’s nest of wrongly dated and falsely witnessed documents to take a loan guarantee from blind and seriously ill disability pensioner Carolyn Flanagan. Westpac general manager of commercial banking Alastair Welsh also admitted that bank processes supposed to ensure people who gave guarantees got a commercial benefit from the loan were no more than a box-ticking exercise. Ms Flanagan gave Westpac security over her house in December 2010 in order to help her daughter get a $160,000 loan to buy a pool repair franchise in Western Sydney. However, the business failed and Westpac moved to take the home. The Financial Ombudsman Service ruled against Ms Flanagan, but after she got help from NSW...
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Banking royal commission: ANZ admits bonus scheme made no sense The Australian 11:50am May 23, 2018 Ben Butler, Elizabeth Redman   A senior ANZ executive has admitted to the financial services royal commission that a bonus scheme encouraging bankers to “relentlessly” sell small business loans made little sense. ANZ’s Kate Gibson, who is currently head of home lending but was previously in charge of small business, also admitted that a disastrous $220,000 loan to a couple who wanted to open a gelato kiosk in Western Sydney was not made with the care and skill of a prudent and diligent banker, as required by the Australian Banking Association’s code of conduct. The royal commission has been examining the loan, made in late 2014 based on a glossy business plan laden with clip-art that appears to have been prepared by the New Zealand-based franchisor. The husband and wife had no experience in running...
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Brisbane apartment valuations on the slide with thousands more units on the way Australian Financial Review May 23 2018 10:29 AM Su-Lin Tan   Mortgage revaluations of second-hand homes in inner Brisbane are between 20 per cent and 30 per cent lower than the prices they originally exchanged for, one more sign of falling demand and over-supply in the Queensland capital, according to private property lender Development Finance Partners (DFP). DFP, which provides commercial loans to residential developers, has discovered that not only are the values of new dwellings being pushed down, but secondary apartments and townhouses have been swept up in the downward slide. The large number of newly completed apartments – about 8300 – expected to hit the city in 2017-18 will only worsen the problem DFP says, quoting the latest residential data from property research group BIS Oxford Economics. An additional 5000 units are in the pipeline for...
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Old-age super products a ‘fraud’ The Australian 12:00am May 22, 2018 Michael Roddan   New superannuation income products backed by government reforms in the budget, which are designed to encourage older Australians to spend big in retirement, have been slammed as “actuarial fraud” by one of the country’s largest funds, the $55 billion Sunsuper. The sentiment — which is shared by large sections of the not-for-profit super industry — marks an early setback for proposals set to be enshrined in law by Financial Services Minister Kelly O’Dwyer, who only last Thursday released a position paper on the so-called comprehensive income products for retirement (CIPRs). This budget progressed government’s plans to encourage development of post-retirement products, with proposals to require super funds to offer specialised post-retirement products that provide income for life. The financial systems inquiry, led by former Commonwealth Bank chief executive David Murray, recommended the government encourage the development of...
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Public service chief John Lloyd grilled over IPA links The Australian 12:00am May 22, 2018 Ewin Hannan   Australian Public Service Commissioner John Lloyd personally emailed the head of the Institute of Public Affairs, John Roskam, a day after he had been grilled in a Senate estimates hearing about his links to the think tank. Mr Lloyd, who once led the IPA’s “work reform and productivity unit”, refused to tell Senate estimates yesterday whether or not he was under investigation over emails relating to him and the IPA. Labor senators said the Department of Prime Minister and Cabinet had refused a Freedom of Information laws request, on the grounds that the emails could prejudice investigation into possible law breaches. Under questioning, Mr Lloyd, a former Australian building and construction commissioner, initially refused to answer questions about whether he was aware of the investigation. Labor senator Penny Wong told Mr Lloyd that...
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