K: Financial and Insurance Services

Byres puts spotlight on incentives

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Original article by James Eyers, Jonathan Shapiro
The Australian Financial Review – Page: 15 & 18 : 3-May-18

Australian Prudential Regulation Authority chairman Wayne Byres has indicated that the structure of incentives in the financial services industry is currently a bigger concern for APRA than the level of remuneration. He notes that scandals in the sector have largely arisen when incentives have focused too much on growth and sales targets. Byres adds that although the general public’s trust in financial services providers has been tarnished by recent scandals in the sector, there is still a lot of trust in the underlying financial strength of such institutions.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AMP LIMITED – ASX AMP, AUSTRALIA. DEPT OF THE TREASURY, UNIVERSITY OF NEW SOUTH WALES

CBA stung: pay cuts for executives

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Original article by Andrew White
The Australian – Page: 1 & 6 : 2-May-18

The Commonwealth Bank of Australia will implement all 35 recommendations of an independent panel that was commissioned to examine its governance, culture and accountability. CEO Matt Comyn says the bank has already made a number of changes since the report was commissioned by the Australian Prudential Regulation Authority in the wake of Austrac’s money-laundering investigation. Amongst other things, senior executives will not receive bonuses and some have agreed to a pay cut.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, AMP LIMITED – ASX AMP, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA

No change in rate, and RBA predicting more economic acceleration

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 2-May-18

The Reserve Bank of Australia’s decision to leave official interest rates unchanged on 1 May was widely anticipated. The cash rate has now been on hold for an unprecedented 21 months. RBA governor Philip Lowe said the central bank still expects an increase in wages and inflation to be gradual, as will a fall in the unemployment rate. However, Lowe again said the Australian economy is likely to expand by more than three per cent in 2018 and 2019, compared with just 2.4 per cent in 2017.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

Call for clean-out of AMP board

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Original article by Andrew White
The Australian – Page: 17 & 21 : 1-May-18

Institutional investors say further boardroom changes are needed at AMP following the resignation of chair Catherine Brenner in the wake of the banking royal commission’s revelations. First Super CEO Bill Watson still intends to vote against the election of three directors at the upcoming AGM, arguing that AMP directors must be held accountable. Australian Council of Superannuation Investors CEO Louise Davidson says AMP should also look at stripping bonuses from executives who were involved in the fees-for-no-service scandal. AMP has appointed Mike Wilkins as executive chairman.

CORPORATES
AMP LIMITED – ASX AMP, FIRST SUPER PTY LTD, AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, ART GALLERY OF NEW SOUTH WALES, BORAL LIMITED – ASX BLD, COCA-COLA AMATIL LIMITED – ASX CCL, CLAYTON UTZ, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, IMF BENTHAM LIMITED – ASX IMF, PHI FINNEY McDONALD, SHINE LAWYERS, SLATER AND GORDON LIMITED – ASX SGH, QUINN EMANUEL URQUHART AND SULLIVAN LP

CGU, RACV and CBA have most loyal general insurance customers

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Original article by Roy Morgan
Market Research Update – Page: Online : 1-May-18

A Roy Morgan Single Source survey shows that 77.5% of Australians aged +14 with general insurance do not approach any other company when renewing their policy. An additional 14.8% approach another company but do not change their policy. The survey, which was carried out in the year to March 2018, also shows that the most loyal customers, based on the proportion of policy holders that renew without approaching another company, are with CGU (85.0%), RACV (82.8%) and CBA (82.6%). The least loyal are GIO (69.0%) and AAMI (72.7%).

CORPORATES
ROY MORGAN LIMITED, CGU INSURANCE AUSTRALIA LIMITED, RACV INSURANCE, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, GIO AUSTRALIA LIMITED, AUSTRALIAN ASSOCIATED MOTOR INSURERS LIMITED, RACQ INSURANCE LIMITED, SUNCORP GROUP LIMITED – ASX SUN

Stress test reveals risk for Australian banks

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Original article by Samantha Bailey
The Australian – Page: 28 : 1-May-18

Fitch Ratings’ mortgage "stress test" of Australia’s major banks shows that they could be vulnerable if a sharp downturn in the housing market were accompanied by a decline in consumer spending and an increase in business lending losses. Fitch warns that a sharp rise in the unemployment rate could trigger a housing market slump, but the ratings agency concludes that the four major banks could withstand such a downturn provided that other key metrics were not affected.

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

AMP chair to be Hayne’s biggest scalp

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Original article by Jennifer Hewett, Alice Uribe
The Australian Financial Review – Page: 1 & 19 : 30-Apr-18

Institutional investors have warned that they will vote against the re-election of three AMP directors at the upcoming AGM, even if chairman Catherine Brenner resigns. She is widely tipped to step down in the wake of a board meeting on 29 April. CEO Craig Meller recently resigned after misconduct at AMP was exposed by the banking royal commission. The revelations have weighed on AMP’s share price, which has fallen to its lowest level in more than five years.

CORPORATES
AMP LIMITED – ASX AMP, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, FIRST SUPER PTY LTD, LGSS PTY LTD, AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED, REST SUPER PTY LTD, HOST-PLUS, AUSTRALIAN SHAREHOLDERS’ ASSOCIATION, CGI GLASS LEWIS PTY LTD, BELL POTTER SECURITIES LIMITED, COCA-COLA AMATIL LIMITED – ASX CCL, BORAL LIMITED – ASX BLD, BRAMBLES LIMITED – ASX BXB

APRA to unveil CBA report this week

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Original article by James Eyers
The Australian Financial Review – Page: 19 : 30-Apr-18

An independent panel has spent more than six months examining the Commonwealth Bank’s governance and culture on behalf of the Australian Prudential Regulation Authority. The panel, which consists of corporate director Jillian Broadbent, former Australian Competition & Consumer Commission chairman Graeme Samuel and former APRA chairman John Laker, is due to report its findings to APRA on 30 April, with APRA to make the findings public in the next few days. It is likely that the panel will be critical of a lack of emphasis on risk culture at the bank, and of its investments in risk systems.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE

Super rollover plan for SMSFs

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Original article by Michael Roddan
The Australian – Page: 26 : 27-Apr-18

Financial Services Minister Kelly O’Dwyer is expected to announce that self-managed superannuation funds will be able to increase the number of members from four to six under new legislation. Members of SMSFs will also be allowed to roll over funds from an Australian Prudential Regulation Authority-regulated super fund using the SuperStream technology; currently, rollovers through SuperStream are only allowed from one APRA-regulated fund to another. more than 1.1 million Australians have SMSFs, which currently boast around $A700 billion worth of assets.

CORPORATES
AUSTRALIA. DEPT OF FINANCE, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN TAXATION OFFICE

FPA preoccupied with hiding adviser’s identity

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Original article by Joanna Mather, Fiona Buffini
The Australian Financial Review – Page: 4 : 27-Apr-18

The Financial Planning Association requested that the banking royal commission keep confidential the details of a member who is the subject of disciplinary action. The financial planner in question, Sam Henderson, is also the subject of disciplinary action by the SMSF Association. He contributes articles on financial planning to a weekend newspaper and he has a television show on Sky News. The FPA’s action against Henderson was prompted by advice he gave that had the potential to reduce a client’s superannuation benefit by $A500,000.

CORPORATES
FINANCIAL PLANNING ASSOCIATION OF AUSTRALIA LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, SMSF ASSOCIATION, SKY NEWS, ASSOCIATION OF FINANCIAL ADVISERS LIMITED, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION