K: Financial and Insurance Services

Hayne to leave banks with billion-dollar bill

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Original article by Angus Grigg, James Eyers, Edmund Tadros
The Australian Financial Review – Page: 1 & 8 : 17-Sep-18

Australia’s major banks face years of litigation and costly settlements as a result of the banking royal commission. Law firm Maurice Blackburn has already flagged plans for legal action over a number of issues, including the calculation of household expenses prior to loans being approved. Omkar Joshi of Regal Funds Management says he is reminded of the UK’s payment-protection insurance scandal, which ended up costing UK banks Stg40 billion. Hugh Giddy of Investors Mutual says it is hard to deny that banks have made loans to some people who were not in a position to borrow money.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, MAURICE BLACKBURN PTY LTD, REGAL FUNDS MANAGEMENT PTY LTD, INVESTORS MUTUAL LIMITED, AMP LIMITED – ASX AMP, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, LLOYDS BANK PLC, OLIVER WYMAN GROUP, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, SLATER AND GORDON LIMITED – ASX SGH, CORELOGIC AUSTRALIA PTY LTD

Insurer bullied nurse to stop claim

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Original article by Elizabeth Redman,{SHARE}Michael Roddan
The Australian – Page: 2 : 14-Sep-18

The financial services royal commission heard evidence on 13 September that TAL paid a private investigator $20,000 to follow a person after it had reluctantly paid out her claim on a mental health policy. The commission heard that TAL, which has around 18 per cent of the life insurance market, had to be taken before the Financial Ombudsman Service before it would agree to pay the claim. The commission also heard evidence that Comminsure rejected a claim from a breast cancer sufferer because her operation was not deemed "radical" enough, despite there being no definition of "radical breast surgery" in its policy documents.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY,{SHARE}TAL LIMITED,{SHARE}COMMINSURE,{SHARE}FINANCIAL OMBUDSMAN SERVICE LIMITED

Sack them all, says insurance boss

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Original article by Michael Roddan, Elizabeth Redman
The Australian – Page: 2 : 11-Sep-18

The banking royal commission commenced its investigation into the life insurance sector on 10 September. Senior counsel assisting the commission, Rowena Orr QC noted the industry had paid $6 billion worth of commissions to financial planners over the five years to 2017, suggesting this was a key factor behind the sector’s unethical behaviour. ClearView chief risk officer Greg Martin admitted to the commission that it had breached anti-hawking laws more than 300,000 times, and that it had a "full on sales" culture.

CORPORATES
AUSTRALIA. JOINT COMMITTEE OF PUBLIC ACCOUNTS AND AUDIT, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, CLEARVIEW WEALTH LIMITED – ASX CVW

ASIC accuses NAB of $100m super rip-off

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Original article by Ben Butler, Michael Roddan
The Australian – Page: Online : 7-Sep-18

The Australian Securities & Investments Commission has launched legal action against National Australia Bank over the fee-for-no-service scandal. ASIC claimed in a suit filed with the Federal Court on 6 September that NAB had breached the law on 77 occasions, and that it had "ripped off" over 500,000 unwitting superannuation fund members to the tune of more than $100 million. ASIC claimed NAB’s actions had undermined confidence in the superannuation system, while NAB faces fines of up to $37.5 million.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, FEDERAL CIRCUIT COURT OF AUSTRALIA

ANZ and CBA hike variable home loans rates

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Original article by Michael Roddan
The Australian – Page: Online : 7-Sep-18

The Commonwealth Bank and the ANZ both announced increases to their variable home loan rates on 6 September. The ANZ will increase its rates by 16 basis points as from 27 September, while the CBA’s 15 basis point increase will take effect from 4 October. Fred Ohlsson, the head of ANZ Australia, said the decision to lift rates was a difficult one, while CBA retail bank boss Angus O’Sullivan said it had lifted its rates after "careful consideration". The announcement by the ANZ and the CBA that they were lifting their rates prompted the Australian dollar to fall from $US0.7202 to $US0.7180.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA

Poor connection – ASIC to restrict life insurance telemarketers due to mass policy cancellation

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Original article by Ceyda Erem
mozo.com.au – Page: Online : 31-Aug-18

The Australian Securities & Investments Commission has found that up to one in five life insurance policies sold over the phone are cancelled during their cooling-off period. ASIC found that one of the main reasons for the high level of cancellation was the lack of information provided about important policy features. Meanwhile, research by Roy Morgan has found that 10.8 per cent of those holding risk and life insurance policies either switched their policies or actively thought about doing so in the year to June.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, ROY MORGAN LIMITED

Watchdog’s growl could keep banks from following Westpac

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Original article by Richard Gluyas
The Australian – Page: 21 : 31-Aug-18

Jon Mott of UBS has suggested that the federal government could potentially increase the bank levy in response to Westpac’s move to increase its variable home loan interest rates. Mott adds that the other major banks may not increase their rates immediately as their net interest margins are under less pressure, while they may also be deterred by the Australian Competition & Consumer Commission’s focus on the banking sector.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, MORGAN STANLEY AUSTRALIA LIMITED

CBA to disclose fees to borrowers

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Original article by Duncan Hughes
The Australian Financial Review – Page: 8 : 31-Aug-18

Morgan Stanley estimates that about 43 per cent of the Commonwealth Bank of Australia’s home loans are sold via its network of mortgage brokers. CBA has advised that from now on its home loan customers will be fully informed as to how much brokers receive in commissions. The bank had previously not done so, telling the banking royal commission earlier in 2018 that the size of such commissions cannot be accurately calculated. CBA’s new disclosure standards will cover both upfront and trailing commissions.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, MORGAN STANLEY AUSTRALIA LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. PRODUCTIVITY COMMISSION, WESTPAC BANKING CORPORATION – ASX WBC, COMBINED INDUSTRY FORUM

Move likely to delay RBA hike

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Original article by Ronald Mizen
The Australian Financial Review – Page: 7 : 31-Aug-18

Data from Bloomberg shows that financial markets view the chances of a reduction in the cash rate by the end of 2019 to be just 58.7 per cent in the wake of Westpac’s out-of-cycle increase in its variable mortgage interest rates. Shane Oliver of AMP Capital says the other major banks are likely to follow, which will in turn mean that the Reserve Bank is likely to leave the cash rate on hold until least 2020. Oliver and David Bassanese of Betashares Capital also suggest that the central bank could potentially reduce the cash rate if Westpac’s rivals increase their interest rates.

CORPORATES
AMP CAPITAL INVESTORS LIMITED, BETASHARES CAPITAL LIMITED, RESERVE BANK OF AUSTRALIA, BLOOMBERG LP, BIS OXFORD ECONOMICS PTY LTD, CANSTAR PTY LTD, ST GEORGE BANK LIMITED, BANK OF MELBOURNE LIMITED, BANK OF SOUTH AUSTRALIA LIMITED, RAMS HOME LOANS PTY LTD

Future Fund wary as economy holds up

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 17 & 31 : 30-Aug-18

The Future Fund has posted a 2017-18 return of 9.3 per cent for 2017-18, compared with its targeted return of 6.1 per cent a year. It has achieved a return of 8.7 per cent each year over the last decade. Meanwhile, the Future Fund has reduced its cash holdings in the last year, while its exposure to Australian shares and the private equity sector has increased. MD David Neal says asset prices are likely to fall when synchronised global economic growth comes to an end, while chairman Peter Costello says the tariff war will also affect asset prices.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY