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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26 June 2019   ASIC CHAIRMAN     Re  Sterling New Life  Dear Mr Shipton It is with considerable distress that I write to complain about the preventable loss of our retirement investment in a 40 year Sterling New Life lease worth $254,000 – most of my husband’s superannuation. Following a lifetime of employment housing (my husband was a local church pastor) on a single modest income, it seemed the only way to achieve a secure retirement in Perth where we could be near our son who lives with a disability.   The collapse has devastated us, and I understand it was preventable because ASIC has known about this company and its shady directors since 2015. Whey were we not told before signing away our life savings in super? What is ASIC’s duty of care to the consumer?Natural justice would see an urgent full return of money preventable invested in a fraudulent product for...
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26th June 2019 Chairman of ASIC  Dear Mr Shipton,   further to Denise Brailey’s letter to you on behalf of retirees impacted by the collapse of the Sterling group of companies I would like to add my support to her claim for compensation as a result of ASIC’s negligence. In July 2018 I received a letter from Ray Jones chairman of the Sterling group who stated : “Given that we cannot guarantee the future unit price, for your peace of mind we now undertake to make up any capital shortfall, should one arise, when you end your Sterling New Life tenancy and redeem your investment.  For example, if you invested $200,000 in the Sterling Income Trust, and upon redemption are only entitled to $180,000 based on the unit price at the time, Sterling will contribute a further $20,000, bringing the redemption amount back up to $200,000. The amount will be the...
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Mr James SHIPTON Chairman of Australian Securities & Investments Commission,  120 Collins St, Melbourne VIC 3000     Tuesday June 26th 2019   Dear Mr Shipton,   I am writing to tell you of my utter disgust at how my wife and I along with many more people have been treated by your department and on your watch.   My wife and I deposited funds into Sterling New Life on May 25th 2018 as a means of protecting our remaining years. We have recently found out that you and your department had been investigating Sterling New Life for up to three years prior to our depositing money.   Why Mr Shipton did you not set off alarm bells in order to protect the interest of good Australian citizens. Australian citizens Mr Shipton who had paid taxes all their working lives and, in many cases, served in the armed forces ready to defend...
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'Everyone at the top of the banks is hurting': Anna Bligh Australian Financial Review May 17, 2019 4.18pm Misa Han   The banking industry's top lobbyist, Anna Bligh, says changing culture and accepting a higher level of professionalism means accepting lower growth levels in the financial services industry. The chief executive of the Australian Banking Association said the half-year results of the three major banks and the quarterly results of the Commonwealth Bank reflect the cost of "short-termism". "Every one of those banks is reporting to the market significant amounts of money have been set aside as provisions for remediation," she told a panel at the Australian Securities and Investments Commission annual forum on Friday. "If you say you're changing and it doesn't hurt, then you're not changing. "And I think everybody at the top of the banks is hurting and I think they understand there's some more pain to come."...
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  ANZ pulls plug on key advice service as Hayne fallout continues Sydney Morning Herald May 17, 2019 3.17pm Clancy Yeates   ANZ Bank will stop offering its flagship financial advice service, as the industry grapples with the fallout from the fees-for-no-service scandal and the royal commission's scrutiny. In the latest change by a major bank in the advice sector, ANZ on Friday said it would phase out its "prime access" offering, which involved various services including an annual financial review. Instead, the bank will charge for advice on a case-by-case basis, meaning that more complex advice will lead to higher fees. Customers will also be given the choice of how frequently they want a review of their financial plan, rather than the current practice of annual reviews. The overhaul was announced as it also emerged that ANZ would have to hold more capital for "operational risk" in its New Zealand...
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RBNZ hints at more actions against ANZ Australian Financial Review May 17, 2019 3.23pm James Frost   ANZ Banking Group's relationship with the Reserve Bank of New Zealand has deteriorated after it was penalised for running an unapproved model for its rainy day reserves, and the central bank flagged it may be just the tip of the iceberg. The bank suffered a humiliating blow on Friday after the privilege to run its own operational risk reserve was revoked by the RBNZ when ANZ admitted it had been using a rogue model for almost five years. New Zealand’s central bank has, however, rejected claims the move was payback for ANZ’s inflammatory remarks about withdrawing from the country in response to increased capital weightings. The RBNZ said the bank changed its approach to calculating the size of a rainy day fund known as operational risk capital reserve in 2014 but did inform the...
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Banks dodging capital crisis with negative equity fiddle MacroBusiness 12:00 pm on May 17, 2019 David Llewellyn-Smith   Macquarie has dug into the bank’s negative equity reporting and found, guess what, chaos: ANZ’s negative equity data was the highest of the big four at 5 per cent, or 4.25 per cent when offset accounts are factored in. Macquarie said ANZ’s approach – which used combined customer debt secured by property divided by property value – was the most granular and the most “conservative”. CBA uses a similar methodology for arriving at its figure, but unlike rival banks its published figure disclosed the number of loans rather than overall value. Benchmarking against the RBA data, Macquarie suggested negative equity could be as high as 4.2 per cent across the book. NAB used a state-based pricing index “which in our view materially understates the extent of the issue”, Mr German said. Macquarie found...
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ASIC's 'why not litigate' strategy kills enforceable undertakings Australian Financial ReviewMay 16, 2019 7.00pm Misa Han, James Eyers, Edmund Tadros   The corporate watchdog's chief enforcer Daniel Crennan, QC, has called time on much-maligned enforceable undertakings as a way to eliminate misconduct from the banks, but the regulator's strategy of taking more court action has been attacked by its global overseer. Mr Crennan told the Australian Securities and Investments Commission annual forum on Thursday that in the "post-royal commission world" enforceable undertakings are "fairly unlikely to be provided" by the regulator because they do not require an admission of liability. He said it was "unsurprising" that in the past enforceable undertakings were used by the regulator given civil penalties were not available for financial institutions that breached their cornerstone obligation of acting efficiently, honestly and fairly. However, that has changed after the government passed laws allowing ASIC to pursue fines of...
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Financial advisers to get qualification in ethics Australian Financial Review May 15, 2019 5.11pm Robert Bolton   The Ethics Centre is launching a university level course in ethics which will be offered to the new regulator the Financial Adviser Standards and Ethics Authority. From January entrants to the sector will have to meet new skill and performance standards. The Financial Adviser Standards and Ethics Authority (FASEA), which was rushed into existence in 2017 on the back of scandals involving mis-selling of financial products, will implement a code of ethics at the beginning of next year. Ethics Centre director Simon Longstaff said selling financial advice was being moved from a market-oriented industry to a profession and needed a sharp lift in standards to make the jump. From January 1, studying a course in ethics will be a mandatory part of getting registration as an adviser. "Most professions have evolved slowly. We're asking...
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Warning as housing stock piles up The Australian 12:00am May 17, 2019 Ben Wilmot   The housing market has been hit by a wave of stock build-up with properties taking longer to sell ahead of the federal election that could generate further period of uncertainty, with Labor promising to introduce changes to negative gearing and capital gains tax if it forms the next government. The auction market has dipped despite some signs of stabilisation, and could fall away if the rule changes drive uncertainty and demand from buyers remains soft. CoreLogic analyst Cameron Kusher said there was an elevated level of housing for sale in capital cities. Even if no more properties were advertised for sale it would take 5.3 months for the advertised supply to clear, he said. CoreLogic’s stock indicator has leapt to its highest level for any time since 2012. Just a year ago, there was a lower...
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Property Council of Australia urges RBA, APRA to let banks lend The Australian 12:00am May 16, 2019 Ben Wilmot   EXCLUSIVE  Property chiefs have appealed directly to the Reserve Bank and the Australian Prudential Regulation Authority during a private meeting for a loosening of the strict lending policies imposed on banks, as a credit squeeze starts to bite key parts of the industry. In a meeting with the nation’s top financial regulators this week, the property industry chiefs called on banks to be given the headroom to start lending again, according to people present at the briefing. The move comes in the wake of a collapse in a housing approvals to a near five-year low and puts the real estate industry on the same course as bank chiefs who have called for a relaxation of loan buffer repayment rules that have crimped lending to home buyers. Their input — delivered by...
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Australia to pay multi-million-dollar penalties to French submarine builders if deal collapses ABC News 15 May 2019 Andrew Greene   Australia will be forced to make multi-million-dollar compensation payments to France if the future submarine program is terminated, according to leaked figures obtained by the ABC. The "break payments" are outlined in the confidential Strategic Partnering Agreement (SPA) that guides the $50 billion project, which was signed in February by France and Australia's defence ministers. In 2016, former prime minister Malcolm Turnbull announced Naval Group (then known as DCNS) had beaten rival bids from Germany and Japan to build 12 new submarines for the Royal Australian Navy over the next three decades. The ABC has now obtained a section of the confidential SPA document, prepared last year, detailing at which point certain "break payments" will be invoked if Australia decides to walk away from the massive contract. Defence industry expert Andrew...
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APRA capital rules ‘stifle’ lending, says COBA The Australian 12:00am May 15, 2019 Richard Gluyas   The prudential regulator’s capital rules for home loans discriminate against small banking institutions and put them at a major competitive disadvantage, according to a report commissioned by the $116 billion customer-owned banking sector. The Pegasus Economics report, which concludes that the Financial System Inquiry’s 2014 warning about risks to competition in the banking sector have come to fruition, comes ahead of the Australian Prudential Regulation Authority’s release of a draft revised capital framework for the industry. Pegasus says the framework will have a “profound” impact on the level of competition in banking, particularly in the largest lending segment of residential mortgages. Customer Owned Banking Association chief executive Michael Lawrence said yesterday that there was an acute need for a competitive and efficient home lending market. “Following the financial services royal commission there’s a renewed focus...
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'Mr Dickens, what's your income and what are your expenses?' Australian Financial Review May 14, 2019 5.14pm Misa Han   Westpac has delivered a scathing attack on the corporate regulator, saying its "19th century approach" of fixating on the formula of income minus expenses does not stack up in the 21st century environment. ASIC and Westpac are fighting in the Federal Court over whether the bank lent irresponsibly because it relied solely on a conservative benchmark in estimating household expenses. In his closing submission on Tuesday, Westpac's barrister, Jeremy Kirk, SC, likened ASIC's approach to acting like "19th century accountants keeping a book" as the 19th century author Charles Dickens walks in. Mr Kirk mockingly said: "Mr Dickens, what's your income and what are your expenses?" Westpac's defence is that its automated decision making system applied more than 200 rules and if a home loan application failed any of the rules,...
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'A throwaway city of junk buildings': Leading architect slams NSW government over heritage Sydney Morning Herald May 11, 2019 1.19pm Andrew Taylor   Sydney is in danger of becoming “a throwaway city of junk buildings” built on the cheap to be knocked down every 30 years, a leading architect and City of Sydney councillor has warned. Philip Thalis also criticised the NSW government's sell-off of public buildings, which he said constituted "a theft of public assets", and the destruction of heritage buildings and streetscapes caused by projects such as the Sydney Metro, Westconnex and roadworks. "Public Sydney risks becoming privatised Sydney," said Cr Thalis, speaking at the National Trust Heritage Awards 2019 on Friday. "We know that regardless of political persuasion, privatisation is deeply unpopular with the majority of citizens, and constitutes a theft of public assets that would otherwise have been available to future generations." Cr Thalis pointed to the...
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Mortgage-backed securities defy homes slump The Australian 12:00am May 15, 2019 Joyce Moullakis   EXCLUSIVE  A housing market slump and emerging pockets of borrower stress this year have not deterred banks and other lenders from the securitisation market or their plans for future activity. That is the main finding of The 2019 Australian Securitisation Issuer Report that conducted two stages of research across 55 issuers of the securities. The report is being jointly released by Perpetual and The Australian Securitisation Forum (ASF), which counts the big four banks, AMP and Credit Union Australia among its members. Securitisation is an important funding source for banks and other lenders as they can package mortgages and other loans and sell them in tranches as tradeable debt securities. The report found that despite a marked slowdown in housing credit growth, 46 per cent of respondents said they would be likely to increase their securitisation issuance...
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Property Council PM’s dirty and dangerous FHB brain fart MacroBusiness 12:30 pm on May 14, 2019 David Llewellyn-Smith   Scummo revealed at Domain: A $500 million plan to help first-home buyers into the market did not go through cabinet and has not been modelled for its impact on property prices, as experts warn the policy will struggle to meet its objectives. The first some members of cabinet heard about the plan, which will see the government effectively guarantee a portion of loans taken out by first time buyers, was when Prime Minister Scott Morrison announced it during the Coalition’s election campaign launch on Sunday. More at Banking Day: Banking Day was told by several industry sources on Monday that the policy was slapped together by the coalition in the last week after the Housing Industry Association floated the idea to the caretaker government. The policy, which has triggered a stream of...
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Banking system the elephant in the room at this election The Mercury May 15, 2019 12:50am Ray Williams Ray Williams is a Citizens Electoral Council (CEC) candidate for the Senate. He was in banking for 22 years and for 30 years has been in business at New Norfolk including as owner of New Norfolk Gun Shop and Williams Outdoors. He has been a Derwent Valley councillor and a national director of hardware group Mitre 10.   The future of Australia’s banking system is the elephant in the room in the federal election campaign. The major parties ignore the reality of a new global financial crisis, either through negligence or wilful intent. What’s telling is their collusion to ram through a “bail-in” policy to protect the banks, even using people’s bank deposits if necessary — before the Banking Royal Commission was convened — which indicates they are well aware of an impending...
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CBA’s result does little to lift banking gloom The Australian 12:00am May 14, 2019 Richard Gluyas   As the curtain falls on the major bank profit-reporting season, there’s very little — if anything — for investors to celebrate. Even with last year’s hike in variable mortgage rates, every line of revenue is under pressure. Remediation and compliance costs continue to mushroom, and after eight years of the most benign credit conditions imaginable, the credit cycle has ominously started to turn. Commonwealth Bank’s third-quarter trading update failed to pierce the gloom. Cash profit for the three months to March was $1.7 billion, down 9 per cent or 28 per cent after notable items. The 4 per cent decline in group revenue reflected a 10 per cent slump in non-interest income after the adoption of more customer-friendly fee structures ($30 million cost), an unfavourable derivative valuation adjustment ($50m) and adverse weather events ($30m)....
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Westpac ’ignored’ credit checks on loans, ASIC tells court The Australian 9:04pm May 13, 2019 Joyce Moullakis   Westpac breached the law by relying on benchmark industry expenditure measures to assess potential mortgage customers rather than using them as a “cross-checking tool”, the corporate regulator told Federal Court on Monday. The Australian Securities and Investments Commission was making its closing statement before judge Nye Perram in an action against Westpac. It alleges the bank failed to properly verify the actual financial position of borrowers 261,987 times. Jeremy Clarke SC, for ASIC, said Westpac in many cases “just discarded” information on customer expenses and reverted to a formulaic Household Expenditure Method. “The HEM itself is not a reliable estimate of the particular consumer’s financial expenses,” he said. “We are saying they (Westpac) haven’t done the very first step” of considering the customer’s financial position. But Justice Perram at one stage sounded unconvinced...
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