K: Financial and Insurance Services

Millions of people being left behind as big banks close branches, say experts

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Original article by Matthew Elmas
The New Daily – Page: Online : 16-Feb-24

Researchers from RMIT and Swinburne University have warned that many Australians are being left with limited or no access to banking services as the sector shifts to digital banking. The nation’s major banks have closed hundreds of branches in recent years, but Julian Thomas from RMIT says a significant proportion of Australians either lack reliable access to the internet or cannot afford the cost. The banking industry has claimed that nine out of 10 Australians now use online banking; however, the researchers’ analysis of digital inclusion index data shows that only 74 per cent of people aged 75+ and 87 per cent of public housing tenants do so. They also note that many people in regional and rural areas lack reliable internet access.

CORPORATES
RMIT UNIVERSITY, SWINBURNE UNIVERSITY OF TECHNOLOGY

Insurance premiums rise faster than Australia’s inflation, spurred by frequent extreme weather

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Original article by Josh Nicholas, Jonathan Barrett
The Guardian Australia – Page: Online : 6-Feb-24

The latest inflation data shows that insurance premiums have risen by 16.2 per cent over the last year. In contrast, the annual inflation rate was just 4.1 per cent. An Insurance Council of Australia spokesperson says factors such as the rising cost of natural disasters are contributing to the spike in premiums. Reinsurers are also taking into account the impact of climate change when setting their prices, and any such increases are ultimately passed on insurance companies’ customers.

CORPORATES
INSURANCE COUNCIL OF AUSTRALIA LIMITED

RBA rate cuts a double-edged sword for first-home buyers

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Original article by Matt Bell
The Australian – Page: 19 : 6-Feb-24

The Reserve Bank of Australia is widely tipped to leave the cash rate unchanged at 4.35 per cent on Tuesday. Sally Tindall of RateCity says the key focus will be on whether the central bank removes its tightening bias. Meanwhile, money markets now expect the RBA to reduce the cash rate by 25 per cent in both August and November. Ray White’s chief economist Nerida Conisbee notes that interest rate cuts will increase the borrowing power of first home buyers, but can also be expected to further boost house prices.

CORPORATES
RESERVE BANK OF AUSTRALIA, RATECITY PTY LTD, RAY WHITE GROUP

Mortgage stress increased in December following RBA’s November rate rise but still below mid-year highs

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Original article by Roy Morgan
Market Research Update – Page: Online : 31-Jan-24

New research from Roy Morgan shows that 1,527,000 mortgage holders (30.3%) were ‘At Risk’ of ‘mortgage stress’ in the three months to December 2023. This period included an interest rate increase on Melbourne Cup Day, with the RBA raising interest rates to 4.35%. The figure for December represented the highest level of mortgage stress for three months as the impact of the interest rate increase flowed through, but still below the record highs above 1.56 million mortgage holders ‘At Risk’ in both August and September 2023. This is only the fourth time the index has shown over 1.5 million mortgage holders to be considered ‘At Risk’. The number of Australians ‘At Risk’ of mortgage stress has increased by 720,000 since May 2022, when the RBA began a cycle of interest rate increases. Meanwhile, the number of mortgage holders considered ‘Extremely At Risk’ of mortgage stress is now numbered at 964,000 (19.8% of mortgage holders), which is significantly above the long-term average over the last 10 years of 14.2%. These are the latest findings from Roy Morgan’s Single Source Survey, based on in-depth interviews conducted with over 60,000 Australians each year, including over 10,000 owner-occupied mortgage-holders.

CORPORATES
ROY MORGAN LIMITED

Future Fund lifts returns on back of equities rally

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 13 : 24-Jan-24

The federal government’s Future Fund has advised that it has posted a return of eight per cent in the year to 31 December. The sovereign wealth fund has in turn reported an annualised return over three years of 7.4 per cent, and 7.6 per cent over five years. The Future Fund’s full-year return for 2023 was boosted by a sharemarket rally in the fourth quarter, which increased the value of its assets by 3.2 per cent. Future Fund chairman Peter Costello says the high inflation environment of the last two years has made it harder for the fund to achieve its mandated return target.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY

Super fund satisfaction improves since low in July 2023 with strong performances from HESTA, Unisuper & CARE Super

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Original article by Roy Morgan
Market Research Update – Page: Online : 24-Jan-24

New data from Roy Morgan’s Superannuation Satisfaction Report shows an overall super fund satisfaction rating of 65.9% in November 2023, an increase of 0.9% points from July (65.0%). However, satisfaction with super funds is still significantly higher than the long-term average of 58.2% from 2007-2023, and also higher than at any time prior to the pandemic years of 2021-22 when the measure was at record highs. Customer satisfaction for Industry Funds is down 1.4% points to 68.2% compared to a year ago, although this is the smallest decline of any of the four super fund categories. Customer satisfaction with Retail Funds has declined by 2.7% points to 58.9%, and this category continues to have clearly the lowest customer satisfaction of any of the four categories. Customer satisfaction for Public Sector Funds has in turn declined by 3.2% points from a year ago to 70.7% – the largest decline for any of the super fund categories. A standout performer over the past year has been Self-Managed Funds, which have increased their customer satisfaction by 1.9% points to 75.8% and clearly the highest customer satisfaction of any of the four super fund categories. This is the highest level of customer satisfaction for Self-Managed Funds since May 2022. The report’s findings are from Roy Morgan Single Source, Australia’s most trusted consumer survey, compiled by in-depth interviews with over 60,000 Australians each year.

CORPORATES
ROY MORGAN LIMITED

Investors caution markets still too bullish on rates

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Original article by Cecile Lefort
The Australian Financial Review – Page: 21 : 24-Jan-24

Financial markets have scaled back their expectations of interest rate cuts from the Reserve Bank of Australia in 2024; the RBA is now expected to reduce the cash rate by 37 basis points over the year, compared with expectations of a 55 basis point cut earlier in January. Tim Van Klaveren of UBS expects two rate cuts in 2024, while Matt Wacher from Morningstar anticipates three rate cuts in response to an economy that he expects to slow quickly. Meanwhile, financial markets have now fully priced in a US interest rate cut in June.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, MORNINGSTAR PTY LTD

Economists warn of unintended fallout from RBA overhaul

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Original article by Cecile Lefort
The Australian Financial Review – Page: 21 : 17-Jan-24

Economists polled by The Australian Financial Review have expressed some reservations with regard to how the Reserve Bank will communicate monetary policy decisions under its new structure. The RBA’s mew Monetary Policy Board will be responsible for setting interest rates; it will publish details of how the board voted on rate decisions, but not the voting records of each board member. Economists contend amongst other things that not diclosing these votes could potentially give rise to speculation of dissension amongst board members when this does not exist.

CORPORATES
RESERVE BANK OF AUSTRALIA

Mortgage stress continued to ease in November despite the RBA raising interest rates on Melbourne Cup Day

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Original article by Roy Morgan
Market Research Update – Page: Online : 17-Jan-24

New research from Roy Morgan shows that 1,490,000 mortgage holders (29.9%) were ‘At Risk’ of ‘mortgage stress’ in the three months to November 2023. This period included only one interest rate increase on Melbourne Cup Day, with the RBA raising interest rates to 4.35%. The figure for November represented a second straight monthly decrease as mortgage stress continued to ease due to a combination of factors – including increased household incomes, increased employment and reduced amounts borrowed and outstanding. This is the first time since January 2022 (before the RBA began raising interest rates) that mortgage stress has decreased for two straight months. However, despite the easing in mortgage stress this was only the sixth time in the history of the index that over 1.45 million mortgage holders were considered ‘At Risk’. The number of Australians ‘At Risk’ of mortgage stress has increased by 683,000 since May 2022 when the RBA began a cycle of interest rate increases. Meanwhile, the number of mortgage holders considered ‘Extremely At Risk’ of mortgage stress is now numbered at 934,000 (19.3% of mortgage holders) which is significantly above the long-term average over the last 10 years of 14.2%. These are the latest findings from Roy Morgan’s Single Source Survey, based on in-depth interviews conducted with over 60,000 Australians each year, including over 10,000 owner-occupied mortgage-holders.

CORPORATES
ROY MORGAN LIMITED

Scams help drive unsustainable increase in complaints about banks, finance firms to AFCA

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Original article by Loretta Florance, Leonie Thorne
abc.net.au – Page: Online : 9-Jan-24

The Australian Financial Complaints Authority has advised that it received over 100,000 complaints in 2023, the most in its five-year history. 8,987 related to scams, up from 4,611 in 2022, and AFCA CEO David Locke says he hopes that 2024 will be the year that anti-scam initiatives by industry and government finally disrupt what he contends is a "serious and organised crime". AFCA’s dispute resolution scheme is intended to be a last resort for consumers, if they cannot get a solution by dealing directly with their bank, but Locke claims the volume of complaints escalated to AFCA is increasing at an "unsustainable rate", and that financial service firms need to do a better job of resolving customer complaints.

CORPORATES
AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY