BFCSA Blog

Bans — but no fine — for adviser who fleeced clients of $4.7m The Australian 12:00am January 22, 2019 Anthony Klan   A financial adviser who ran a ­decade-long $4.7 million superannuation scam that fleeced the life savings of clients, including three retired NRL referees, has been found to have engaged in “blatant misuse of investor funds” — but he has not even been fined, with the corporate regulator failing to pursue one being imposed. The Australian Securities and Investments Commission yesterday announced that Graeme Walter Miller had been banned from managing corporations for three years for running the scam through companies CFS Private Wealth, BDM Asia Pacific and Combined Financial Solutions. In his judgment, Federal Court judge John Reeves said Mr Miller had misappropriated the super and other savings of clients in a “blatant misuse of funds”. In June, former NRL referee Steve Clark revealed he and two other retired...

Hayne royal commission could trigger overhaul of hiring practices at banks Australian Financial Review 21 Jan 2019 4:21 PM James Eyers   The royal commission could trigger an overhaul of bank hiring practices, with PwC suggesting that to restore community trust, recruiting and promotions should be based on personal attributes, such as adaptability and morality, rather than specific skills and qualifications. Ahead of the expected delivery of the royal commission final report to the government at the end of next week, PwC sent a note to clients on Monday saying the inquiry provided an "opportunity for more rigour in the way banks select and evaluate candidates for roles". They should "focus on more testing for personality traits rather than technical skill, knowledge and experience, which can be acquired". The four major banks directly employ almost 160,000 people at a cost of over $20 billion a year. They spend about the same...

Australia's billionaires raked in $100 million a day in 2018: Oxfam Australian Financial Review 21 Jan 2019 1:17 PM AAP   Australia's billionaires grew their combined wealth by $100 million a day last year, Oxfam has revealed as it calls for tax changes to close the growing gap between rich and poor. The nation now has 43 billionaires worth $160 billion between them, while the top one per cent of Australians have more wealth than the bottom 70 per cent combined. "Oxfam Australia is concerned there is no end in sight to this harmful trend that is concentrating ever more wealth in the hands of the already rich and powerful," the charity's chief executive Helen Szoke said on Monday. "Australia is among the wealthiest nations in the world, yet the pervasive gap between the haves and have-nots persists. This inequality simply cannot - and does not need to - continue."...

  Client-owned banks under review The Australian 12:00am January 21, 2019 Joyce Moullakis   EXCLUSIVE  The Customer Owned Banking Association has turned to Phil Khoury, the former regulator who reviewed the larger banking industry’s code of conduct, to undertake the latest detailed assessment of its own governing principles. The Australian can reveal Mr Khoury will conduct a sweeping review of the COBA code of conduct, which aims to be completed by the end of June. The assessment comes against the backdrop of the Hayne royal commission’s final report into the banking and financial services sector and a strong focus on fixing the industry’s failings in prioritising customer outcomes. Commissioner Hayne’s final recommendations stemming from the inquiry will be submitted to the government by February 1. COBA, which represents credit unions, mutual banks and building societies, will inform stakeholders of the code of conduct review in a letter to be dispatched today....

Westpac and ANZ lead pack for bad super funds The Australian 12:00am January 21, 2019 Anthony Klan   EXCLUSIVE  Thousands of employers face ­potential legal action from the corporate watchdog for entering into sweetheart deals with retail superannuation funds at the ­expense of workers, with each of the 17 worst super offerings being employer-connected retail funds. All but one of those worst investments was operated by ANZ’s OnePath or Westpac’s BT, suggesting the recently announced crackdown by the Australian Sec­urities & Investments Commission could begin with investigating employers who had defaulted employees into products provided by those banks. As previously revealed, the 50 worst balanced super investment offerings over the seven years to last March were all bank and ­finance company-owned “retail” funds, with just one retail fund in the list of 135 best performers, ­according to Super­Ratings, which compiles the nation’s most ­respected super data set. The never-before-released list of...

Property price falls could double: Morgan Stanley Australian Financial Review 20 Jan 2019 6:38 PM Duncan Hughes   Property price falls could double previous estimates as weakening sentiment, tight credit and oversupply continue to hit residential markets, pushing falls to their largest since the early 1980s, according to Morgan Stanley. House price falls are steeper than thought as key indicators, ranging from rental conditions to credit supply, weaken, the investment bank's analysis shows. Peak-to-trough property declines are expected to be around 15 to 20 per cent, compared to previous estimates of 10 to 15 per cent, which means the most benign best to worst-case scenario has doubled, it concludes. Evidence of worsening conditions will increase pressure on the Reserve Bank of Australia to soften its outlook for the February 5 meeting, with the balance of risks tilting towards a cut this year, a view shared by an increasing number of economists,...

Chris Bowen presses banking royal commission report release timing Australian Financial Review 20 Jan 2019 11:45 PM John Kehoe   Labor's shadow treasurer Chris Bowen has demanded the Coalition government immediately release the final report of the royal commission into financial services when it is delivered on February 1. Seeking to pressure the government to ensure Labor and the public gets equitable access to commissioner Kenneth Hayne's findings in an election climate, Mr Bowen sent a letter electronically to Treasurer Josh Frydenberg on Sunday outlining the Opposition's request. The government has recently been weighing up either releasing the report almost immediately upon receipt or allowing a few days to digest the findings and finalise initial responses before addressing the media and public. The report would most likely be released when the Australian Securities Exchange is closed - either after market hours or possibly on a weekend - to allow investors time...

'Tough for them': uncertainty grips bank investors ahead of grim year Sydney Morning Herald 21 January 2019 12:00am Clancy Yeates   Regulatory uncertainty stemming from of a pile of sweeping reviews into the nation's financial sector is set to weigh on investor sentiment towards the banks well into this year deepening any fallout from the more high profile Hayne royal commission. The royal commission is due to hand its final report to the government by February, but banks are also mired in uncertainty over other inquiries covering topics such as competition, retirement savings, law enforcement, dispute resolution, and capital levels in New Zealand. The government has delayed responding to several of these other reviews until it receives commissioner Kenneth Hayne's recommendations. Politics is adding to the uncertainty hanging over banks, given Labor's planned changes to negative gearing and franking credits will likely affect lenders. There is also risk that this year's...

ASIC insiders fear legal warfare with banks could backfire Australian Financial Review20 Jan 2019 11:00 PM Aaron Patrick   EXCLUSIVE  The banking royal commission could usher in years of legal warfare with the banks and largely end the big financial settlements used to police the industry, officials inside the Australian Securities and Investments Commission believe. While ASIC has publicly embraced more litigation against the banks, sources close to the corporate regulator say its leadership is concerned royal commissioner Kenneth Hayne will push it too far towards litigation. "In this environment, what Hayne says is going to be embraced by both sides of politics," a source said. "ASIC is ready to fight, but there are a lot of things you can't control when you end up in court." Mr Hayne's findings and recommendations, which are due February 1, are expected to mark a major change in banking regulation enforcement. ASIC insiders expect...

'Tough for them': uncertainty grips bank investors ahead of grim year Sydney Morning Herald 21 January 2019 12:00am Clancy Yeates   Regulatory uncertainty stemming from of a pile of sweeping reviews into the nation's financial sector is set to weigh on investor sentiment towards the banks well into this year deepening any fallout from the more high profile Hayne royal commission. The royal commission is due to hand its final report to the government by February, but banks are also mired in uncertainty over other inquiries covering topics such as competition, retirement savings, law enforcement, dispute resolution, and capital levels in New Zealand. The government has delayed responding to several of these other reviews until it receives commissioner Kenneth Hayne's recommendations. Politics is adding to the uncertainty hanging over banks, given Labor's planned changes to negative gearing and franking credits will likely affect lenders. There is also risk that this year's...

ASIC insiders fear legal warfare with banks could backfire Australian Financial Review20 Jan 2019 11:00 PM Aaron Patrick   EXCLUSIVE  The banking royal commission could usher in years of legal warfare with the banks and largely end the big financial settlements used to police the industry, officials inside the Australian Securities and Investments Commission believe. While ASIC has publicly embraced more litigation against the banks, sources close to the corporate regulator say its leadership is concerned royal commissioner Kenneth Hayne will push it too far towards litigation. "In this environment, what Hayne says is going to be embraced by both sides of politics," a source said. "ASIC is ready to fight, but there are a lot of things you can't control when you end up in court." Mr Hayne's findings and recommendations, which are due February 1, are expected to mark a major change in banking regulation enforcement. ASIC insiders expect...

Watchdogs wined, dined and given corporate gifts without scrutiny Sydney Morning Herald 22 January 2019 11:48pm Royce Millar & Chris Vedelago   EXCLUSIVE  Australia’s corporate and consumer watchdogs are allowing commissioners and staff to accept gifts and hospitality from the industries they regulate but refuse to publicly disclose the largesse or potential conflicts of interest. Presents in recent years include champagne and vintage wines, expensive dinners, concert tickets, airline upgrades and customised “training seminars” supplied by stockbrokers, banks, law firms and industry lobby groups. In 2017, investment bank Macquarie Group wined and dined Australian Securities and Investments Commission staff at Sydney's Beta Bar at the same time the bank was the subject of multiple ASIC investigations and had been ordered to pay former clients tens of millions of dollars in compensation. And in 2016, Australian Competition and Consumer Commission staff justified being guests of Energy Australia for dinner at a Melbourne...

  Homeless 'emergency': 40% of those needing housing help turned away Sydney Morning Herald 22 January 2019 6:32pm Adam Carey, Benjamin Preiss   MORRISON's World is to make citizens be responsible for their own bad luck and homelessness and jobless situation!  UGH! Almost 40 per cent of people who were homeless or at risk of homelessness in Victoria were refused when seeking help last year, as the state’s social housing shortage grew more acute. New figures reveal the Andrews government failed to increase the size of Victoria’s social housing stocks in its first term, instead overseeing a small decline in the amount of social housing across the state. The Productivity Commission’s Report on Government Services, published on Tuesday, reveals that Victoria has the second worst record in the country for failing to meet the housing needs of vulnerable people, behind NSW. It also reveals that the state went backwards in tackling...

  Shorten invokes WWII over shipping overhaul The Australian 12:00am January 19, 2019 Jared Owens   Bill Shorten has raised the spectre of World War II in his union-backed campaign to overhaul the shipping industry, accusing major companies such as BHP of jeopardising national security by moving away from Australian-flagged and crewed cargo vessels. Mr Shorten ramped up his attack on companies focused on delivering shareholders’ profits. “Why does corporate Australia, the big end of town, think that the next quarter’s profits are more important than our environment, more important than Australian jobs, and more important than Australian national security?” he said. Australian Industry Group chief executive Innes Willox said: “It’s now pretty obvious that the election starting gun has been fired.” “The reality is official data shows that Australian businesses today are no more profitable than they were 20 years ago.” The row over the Coalition’s plans to allow more...

ABCC targets individual manufacturing workers over ACTU rallies The Australian 12:00am January 19, 2019 Ewin Hannan   EXCLUSIVE  The Australian Building and Construction Commission has widened its controversial probe into ACTU anti-Coalition rallies to pursue individual manufacturing workers who now face prosecution and fines for joining last year’s political protests. Documents obtained by The Weekend Australian reveal the ABCC wrote to employees of steel manufacturer Liberty OneSteel this week, seeking to interview them for allegedly breaking the law by joining the ACTU “mega-rally” in Melbourne without their employer’s permission. Union leaders accused the ABCC of acting beyond its powers by pursuing workers outside the construction industry but the agency is relying on little-­publicised provisions of the ABCC legislation, which give a broad definition of building work, to ­justify pursuing manufacturing workers. Documents show the ABCC has also written to construction workers in South Australia, seeking to interview them after they walked...

Retail funds dominate in 50 worst-performing super investments The Australian 12:00am January 19, 2019 Anthony Klan   EXCLUSIVE  Every one of the 50 worst-performing balanced superannuation investments over seven years has been operated by retail funds such as ANZ, Westpac and IOOF, with just one product offered by the for-profit sector making it onto the list of the top 135 performers. In revelations that categorically bring to an end the fierce three-decade dispute between retail and industry funds over which is superior, secretive and highly detailed industry data obtained by The Weekend Australian shows that regardless of the investment timeframe or level of risk involved, retail funds are unquestionably consistently at the bottom and industry funds are consistently at the top. Despite every worker being forced to divert a portion of every pay packet into compulsory super since it was introduced in 1992 — and the key choice most people face...

Brexit: Big four banks, Brambles, Toll, Lendlease buckle up for a rough landing Australian Financial Review 18 Jan 2019 11:00 PM Hans van Leeuwen   London | "Brexit means Brexit," Britain's Prime Minister Theresa May once famously said. But with a mere 10 weeks to go, she still doesn't really know what it means and neither does any Australian entrepreneur, exporter, executive or employee with British or European interests. All they know is, Brexit definitely means business jeopardy, and, even with a blindfold on, they still have to prepare for it. And if we learned only one thing this week, it was that the chances of Britain stumbling out of the European Union without a deal are as high as ever. Cue the prophecies of doom: clogged ports; depleted supermarket shelves and dry petrol bowsers; grounded planes and idle trucks; malfunctioning customs procedures; lapsed derivative contracts and shaky insurance policies; the...

ATO worried about $12b in SMSF loans Australian Financial Review 18 Jan 2019 8:37 PM Joanna Mather  SHOCKING PROOF OF BANKS PREDATORY LENDING!!! EXCLUSIVE  The Tax Office has raised the alarm over the one-third of $39 billion in property loans by self-managed super funds that are guaranteed by assets outside super, such as the family home. If the property market collapses, SMSF trustees in this situation will be hit by a double-whammy of losses to both their retirement savings and personal assets. Regulators have been increasingly concerned about property speculation by SMSFs and Labor has pledged to ban what is known as limited recourse borrowing arrangements (LRBAs). There are $42 billion worth of the loans and the vast majority are for property – $19.4 billion for residential real estate and $20.7 billion for commercial property. ATO assistant commissioner Dana Fleming said the risk of property market contagion was exacerbated for SMSFs...

  Treasury warning on loan defaults if unemployment rises Australian Financial Review 18 Jan 2019 6:45 PM Joanna Mather   Treasury officials have warned the federal government that Australia's high levels of household debt will become unmanageable in the event of a downturn if unemployment rises. "A large increase in unemployment would quickly see an increase in loan defaults, which leads banks to slow the flow of credit to the economy," says a ministerial brief prepared for Treasurer Josh Frydenberg and released under Freedom of Information provisions on Friday. "The situation would likely be compounded by weaker consumption as other households make efforts to repair their balance sheets," the brief, dated November 5 and signed by Macroeconomic modelling and policy division principal adviser John Swieringa said. "Moreover, given residential mortgages comprise around 80 per cent of Australian household debt and around 60 per cent of bank assets, falling house prices increase...

Property index points to Aussie recession Macro Business8:01 am on January 18, 2019 Cross-posted from Prosper Australia  Real estate cycle expert Bryan Kavanagh says turnover and price declines in Sydney and Melbourne during 2018 indicate an economic recession in the 2019-20 financial year. The 2018 “Kavanagh-Putland Index”, released today, shows the total value of Australian real estate sales to GDP.  Mr Kavanagh said the $50 billion pumped into markets by the Rudd-Swan government in 2008-09 to forestall the 2008 real estate bubble-burst of the USA and Europe “had simply kicked the can down the road for a greater financial correction”. “Led by the residential sector, Australian real estate markets have been in bubble territory since 1996, and the 2018 K-P Index update shows the correction is imminent”, Mr Kavanagh said. “The Kavanagh-Putland Index demonstrates that recessions usually ensue within 12 months of the year-on-year index declining by more than 25% –...