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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: Insane APRA’s Wayne Byres gives lenders a clean chit but NO thorough PLAN!!!

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APRA’s Wayne Byres gives lenders a clean chit

The Australian 12:00am July 12, 2018

Michael Roddan

 

The banking regulator has declared “mission accomplished” on shoring up standards in the scandal-ridden home loan sector, and dismissed concerns of a ticking debt bomb of liar loans and fears of rising interest-only mortgage stress.

Australian Prudential Regulation Authority chairman Wayne Byres said yesterday that the era of large-scale overhauls of lending standards and lending restrictions were drawing to a close, as the “heavy lifting” had “largely been done”.

Mr Byres also gave the $1.7 trillion mortgage system a clean bill of health following his latest “stress test” of the industry.

His speech at an economists lunch in Sydney left APRA accused of being “captured” by the industry it regulates at a time when the royal commission is unearthing reams of evidence of misconduct.

The remarks that there would be no new major restrictions placed on the lending activity of the largest banks came despite Mr Byres admitting that many lenders were operating “with incomplete information at the present”, lacked proper “visibility” of the debts held by their borrowers, were continuing to “override” sound lending policies to sell loans, and did not have thorough plans for dealing with an economic crisis.

“While there is more ‘good housekeeping’ to do, the heavy lifting on lending standards has largely been done,” Mr Byres said, noting that any further tightening in lending standards was “expected to be at the margin” of ensuring higher-quality checks of borrower expenses and debts.

His remarks were a surprise to banking analysts and economists who had been expecting APRA to launch strict new rules to combat the perceived threat from the estimated $400 billion worth of loans held by highly indebted interest-only borrowers.

The Reserve Bank has repeatedly warned this year of the risk posed to the economy from heavily indebted households and the likelihood of higher mortgage repayments. Analysts are also concerned about the estimated $500bn worth of fraudulent loans held by borrowers who might have lied about their income and expenses to gain loans.

Mr Byres said APRA’s stress test showed the banking sector would remain above the capital requirement buffer throughout an economic crisis modelled on a plausible scenario where the Chinese economy imploded, causing Australian GDP to fall 4 per cent, the local jobless rate to spike to 11 per cent and house prices tank 35 per cent.

The 13 largest Australian banks included in the stress test were also tasked to model a coinciding scandal involved “misconduct and mis-selling” in residential mortgages.

The founder of LF Economics, Lindsay David, who consults with banks and regulators on the risk profile of the financial system, poked holes in APRA’s stress test.

He said APRA’s scenario of $40bn lost by the banks equated to a mortgage default rate of just 2.3-3 per cent — well below the US mortgage delinquency peak of 11.4 per cent. In APRA’s 20-year history, it has never had to deal with an economic recession or depression in Australia.

“War-gaming their stress test methodology assumes that all hell breaks loose except the mortgage default rate, which under those circumstance appears impossible,” Mr David said.

“APRA’s stress testing scenario is simply further proof it is a captured regulator. They should be ashamed.”

Mr Byres’ address was further evidence of a less intense regulatory stance taken by APRA, after it scrapped its 10 per cent annual growth cap on lending to property investors in April, claiming banks had improved their lending standards. Mr Byres yesterday said the regulator had made a “very conscious” decision not to set a limit on very-high debt-to-income loans in the system, arguing APRA was “wary of being too prescriptive” in areas where banks did not have reliable collections of the necessary data.

Mr Byres said consumers needed to take more responsibility when engaging with a financial company, arguing that it was “important that the concept of caveat emptor” remained in the system. Caveat emptor is Latin for “let the buyer beware”.

“Regulators cannot be everywhere overseeing everything,” he said. “It is important the community understands that.”

He also pointed to the slowing credit growth in the economy as a sign of “softening house prices and rising interest rates”. Westpac treasury economist Rory Robertson asked whether APRA was considering lowering its 7 per cent interest rate buffer — the minimum interest rate level at which borrowers must be able to repay a loan — in order to boost credit growth in the event of a credit crunch.

Mr Byres said there were no plans to lower the buffer. He did not take questions from the media at the lunch. APRA general manager of corporate affairs Paula Hannaford also stopped reporters from asking Mr Byres questions after the address.

“There is nobody holding APRA accountable despite the evidence hammering the fact that they have resorted to extraordinary measures to protecting the banks from having their misconducts and true financial circumstances exposed,” Mr David said.

APRA has faced stiff criticism over its regulatory behaviour in recent months.

The Productivity Commission singled out the 10 per cent investor growth limit in its review of the financial system for handing the major banks a $1bn free kick. To comply with the rules, which affected each individual lender, banks increased variable rates on investor borrowers, leading to a significant financial windfall for the companies.

APRA’s policing of the superannuation sector was also criticised by the Productivity Commission as too-focused on the solvency of funds rather than the interests of members.

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