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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA : Big FOUR BANK SCANDAL costs top $1.3 billion. Yet FRAUD created $1.2 Trillion worth of problems.

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Big four scandal costs top $1.3 billion    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 the bank might need to cut its dividend if the credit cycle worsened.

NAB's provision comes after ANZ this month said it would take a $374 million charge for customer remediation and related costs for the same year, while Westpac last month took a $235 million provision, also due to customer refunds, fines and other related costs.

Commonwealth Bank's full-year results included $389 million in extra provisions for risk, compliance and regulatory costs, which relate to a wider range of issues including a prudential inquiry, financial crimes compliance, and the royal commission.


This did not include CBA's $700 million fine for money laundering compliance failures, and previous compensation paid out by its financial advice arm.

Although each bank has disclosed the costs differently, analysts say there will likely be further provisions to come, as the industry wears the consequences of years of scandal, especially in wealth management.

Morgan Stanley analysts led by Richard Wiles are forecasting the banks face a further $2 billion in compensation and related remediation costs in 2019, and another $875 million in 2020.

Shaw and Partners analyst Brett Le Mesurier estimated the combined pre-tax costs of "poor behaviour" across the big four banks and AMP would be $2.1 billion in the 2019 financial year.

Mr Le Mesurier estimated that including both costs from prior years and future estimates, the total cost of misconduct for the big four and AMP would be almost $7.4 billion.

CLSA analyst Brian Johnson said there would be more "issues" of this type to come out, but he played down the likely size of the cost relative to banks' earnings. Senior executives had an incentive for take these charges sooner, he said, because the government's Banking Executive Accountability Regime meant compensation payouts could affect bonuses paid out.

"There is an incentive to actually bring forward the recognition [of these costs],"Mr Johnson said.

Bell Potter analyst TS Lim said his rough estimate was that each of the big four would face $150 million to $200 million in remediation costs over the next year or two.

"I think it's material, but a lot of people have been warning about higher compliance costs. At the end of the day, the banks need to dig deep to find cost savings to offset these," Mr Lim said.

NAB said the extra costs would take out $261 million from its after-tax profit for the second half.

“Where we have let customers down, we are determined to put things right. We have made good progress in resolving a number of issues that impacted our customers and we want to compensate them as quickly as possible,” NAB chief executive Andrew Thorburn said.

Mr Thorburn will appear before the federal government's banking inquiry in Canberra this Friday, where he will likely face questions over the misconduct exposed at the royal commission.

NAB had previously told the market in August that it would be making extra provisions for compliance expenses.

NAB's provision does not include its costs from responding to the royal commission, which are expected to be in the tens of millions of dollars.

Aside from the compensation costs and lawyers' bills, banks also face weaker credit growth, which analysts believe may slow further as a result of the royal commission's scrutiny and pressure on banks to tighten their lending standards.

The experience of banks overseas following scandals has also been that compensation programs can take several years to resolve. NAB signalled future costs from the wealth misconduct remained uncertain.

The bank said it remained "well positioned" to meet the "unquestionably strong" capital benchmark set by the Australian Prudential Regulation Authority by January 2020.



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