Showing posts with label banks and bankers. Show all posts
Showing posts with label banks and bankers. Show all posts

Friday, 25 May 2018

Now customers can't even trust their local bank tellers


It seems schoolchildren are considered fair game by the big banks......


Junkee, 19 May 2018:

Oh boy. This is a tough one. An investigate report by Fairfax Media has found that Commonwealth Bank employees set up thousands of fraudulent children’s savings accounts in order to meet internal targets and earn bonuses.

That’s right folks. Your mates the Dollarmites? They were in it up to their neck.
According to the report by Fairfax reporter Adele Ferguson, the scam involved employees illegitimately activating Youthsaver accounts that had been set up by parents via the Commonwealth Bank’s school banking program (better known at Dollarmites) but did not contain any actual money. Since the sign-up would not count towards internal sales targets unless a deposit was made in the first 30 days, employees would deposit a small amount of money into the account themselves to ensure that it was counted.

The matter first came to the attention of senior management at the bank in 2013. An internal investigation found that at 150 branches, as many as 5347 Youthsaver accounts contained less than $1 in deposits. According to the Fairfax report, “managers were asked to look into them to see if they had been fraudulently set up using illegitimate sources of funds”, but the bank chose not to broaden the investigation to include the almost 900 other branches that were in operation at the time.

Ultimately, no disciplinary action was taken against employees. In an email obtained by Fairfax, one senior manager said “the issue is widespread, it would seem unfair to name a handful when more are involved”.

The bank did not inform any of the customers or schools involved.


The school banking and customer referral scandals came to light inside the bank shortly after CBA's now chief executive, Matt Comyn, was appointed to run the retail operation in 2012….

“While this practice did not financially harm any of our customers, it was a breach of their trust. For that I’m deeply sorry. As CBA’s new chief executive, my number one priority is to expedite changes that will prevent any behaviour that undermines our customers' trust in us – and to remove any CBA employee who knowingly acts against our customers’ interests.”

The country’s largest consumer group, CHOICE, seized on the scandal to renew its calls to ban school banking schemes.

“It's a pretty basic expectation that bank staff will handle money honestly. Whether it involves five cents or $5 million, any mishandling of funds goes to the heart of trust in the institution,” CHOICE chief executive Alan Kirkland said.

He said if senior staff knew it was happening on a mass scale and did nothing about it, they were complicit in that fraud.

 “This raises serious questions about the culture of the entire bank,” he said


While over at the Banking and Finance Royal Commission………

ABC News, 21 May 2018:

The banking royal commission has heard an elderly, seriously ill woman faced homelessness after her daughter's business failed.

Carolyn Flanagan cannot read or write due to blindness caused by glaucoma, she has trouble speaking due to the effects of cancer surgery, suffers memory loss and has osteoporosis, among other medical problems.

The pensioner sought help from Legal Aid NSW when Westpac tried to take her home, which was used to guarantee her daughter's loan. A complaint was taken to the Financial Ombudsman Service, which found in Westpac's favour.

It was only a last-ditch effort by Ms Flanagan's Legal Aid lawyers that managed to keep her in her home.

Solicitor Dana Beiglari told the hearing her manager at the time "contacted another consumer advocate to see if he had a senior contact at Westpac who we could escalate this matter to, given our client was facing homelessness in her old age".

Ms Beiglari sent a letter to Westpac outlining Ms Flanagan's medical circumstances and managed to secure a "life interest" in the property for her, which means she can remain in the home until she dies or decides to sell.

Counsel assisting the inquiry Michael Hodge QC asked Ms Beiglari about the Westpac employee's response to the case.

"What that employee of Westpac expressed to you was surprise with the thought that Westpac would be evicting and it wasn't in line with what Westpac would normally do?" he asked.

"Yes, that's correct," Ms Beiglari answered.

Ms Flanagan maintained a sense of humour under questioning. After Mr Hodge listed off her litany of health issues, including depression, she quipped "that'd depress anybody".

She gave her evidence through a video link as she was too unwell to travel. 

Westpac's lawyers questioned her recollection of events and the amount of the loan.
Westpac executive Alastair Welsh followed Ms Flanagan and Ms Beiglari in giving evidence. He said there was nothing "technically" wrong with Ms Flanagan being allowed to act as a guarantor.

"My review of the file shows we followed the process I would want the bank to follow," Mr Welsh said.

However, he admitted there were some problems with the bank's handling of the case once the loan failed.

The inquiry heard it was Westpac policy to "exercise extreme caution" with parental guarantees.

Mr Welsh admitted there were warning signs in Ms Flanagan's case that should have been observed by the banker.

"She suffers from quite debilitating health conditions. Would that be a relevant factor?" Mr Hodge asked.

Mr Welsh agreed and said there were no comments on Ms Flanagan's file noting her condition.

The bank manager involved is no longer employed by Westpac.

Sunday, 20 May 2018

Once a banker always a a banker


via @ETUVIC

There are currently fifteen [15] members of the Turnbull Government who formerly worked in the banking, finance, insurance, and/or for-profit superannuation industries and three [3] who worked for large accountancy firmss or lobbying groups.

Friday, 11 May 2018

File this under "Yet Another National Database" cross referenced wih "What Could Possibly Go Wrong?"




A massive breach of Commonweath Bank data exposed last week has raised security fears around a new national database of Australian bank customers, as Labor pushes for a delay to part of the scheme's scheduled introduction in less than two months.
The database - set to go live on July 1 - will include the details of every person who has taken out a loan or a credit card, along with their repayment history.

The Mandatory Comprehensive Credit Reporting scheme was a recommendation of the 2014 financial system inquiry and is designed to give lenders access to a deeper, richer set of data to ensure loans are only being approved for people who can afford to repay them.

The new requirements will first apply to the Commonwealth Bank, ANZ Bank, Westpac and National Australia Bank, given they account for up to 80 per cent of lending to households.

But the collection of sensitive data by private companies has raised concerns in the wake of several high-profile data breaches, including the disappearance of 20 million customers records from the Commonwealth Bank.

The Financial Rights Legal Centre and the Consumer Action Law Centre claim the financial details of millions of Australians will be vulnerable under the new scheme - which includes positive and negative credit histories.

Financial Rights Legal Centre policy officer Julia Davis said the development "was a major intrusion into our financial privacy".

"I don’t think Australians realise this is about to happen," she said.

The legislation states all credit reporting bodies must store the information on a cloud service that has been assessed by the Australian Signals Directorate. It also contains a provision allowing banks to stop supplying customer data to credit providers should there be a major security breach.

Ms Davis said the oversight was welcome but the internal systems of credit reporting bodies remained "completely opaque."

"Once that data goes live in the one place you can't put the toothpaste back in the tube," she said.

Equifax, one of the companies which will have access to the data, had its systems in the US hacked last year, exposing the personal information of 143 million Americans and triggering to the resignation of its chief executive.

It is also being sued by consumer watchdog the Australian Competition and Consumer Commission over allegations it misrepresented its product to consumers by asking them to pay for their own credit histories which are usually available online for free.

The company's general manager of external relations, Matthew Strassberg, said Equifax had "only been a marquee above the door for six months," after the US giant took over the Australian operation formerly known as Veda.

He said the credit reporting business would provide "a 360 degree picture."
"A bank will have a very deep insight into what they know of you," he told Fairfax Media.

Mr Strassberg said he recognised that Australians were concerned about data security…..

Thursday, 3 May 2018

A guide for those following the Turnbull Government response to evidence given in the Financial Services Rooyal Commission


It won't be long before members of the Turnbull Government - from lowly backbenchers through to cabinet ministers - will be seeking to find excuses to give banks, along with finance and insurance companies, a 'get out of gaol free' card despite whatever findings and recommendations are contained in the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

It almost goes without saying that such big political donors are bound to have some members of the government willing to fight in their corner in order to water down whatever post-royal commission legislative provisions are proposed.


To help with discerning just who might play those games, here is a list of Liberal and Nationals MPs and senators with banking/finance/insurance/superannuation backgrounds or who worked for large accountancy firms.


Altogether they make up 16.98 per cent of the Turnbull Government.
 
AUSTRALIAN HOUSE OF REPRESENTATIVES 45TH PARLIAMENT

Malcolm Turnbull MP (Lib) – former investment banker, Goldman Sachs

Josh Frydenberg MP (Lib) - former director, Deutsche Bank AG 

Kelly O’Dwyer MP (Lib) - former executive, National Australia Bank

Mathias Cormann MP (Lib) – former health services manager & acting general manager, HBF Insurance

Scott Bucholz MP (Lib) - former agri-finance manager

Bert Van Manen MP (Lib) - former bank officer, financial adviser 

Jason Falinski MP (Lib) - former strategy and M&A, Insurance Australia Group

Steven Ciobo MP (Lib) - former senior associate, Australasian Institute of Banking and Finance

John McVeigh MP (Lib) – former graduate executive trainee, Bank of Queensland

Barnaby Joyce MP (Nat) - former rural banker

Kevin  Hogan MP (Nat) -  former money market and bond trader, State Bank of NSW/Colonial State Bank & former Investment officer, Australian Catholic Superannuation Fund, former superannuation consultant 

Michelle Landry MP (Nat) - former supervisor, National Australia Bank

David Littleproud MP (Nat) – former banking and finance roles

AUSTRALIAN SENATE 45TH PARLIAMENT

Jane Hume SEN (Lib) - former investment research manager NAFM/ NAB, private banker NAB, senior manager, Rothschild Australia, vice president Deutsche Bank
Arthur Sinodinos SEN (Lib) - former banker

Dean Smith SEN (Lib) - former head insurance strategy, IAG

OTHER MEMBERS OF TURNBULL GOVERNMENT WHO FORMERLY WORKED FOR LARGE ACCOUNTANCY FIRMS/FINANCIAL INDUSTRY GROUPS

Ian Goodenough MP (Lib) - former accountant and senior associate, Financial Services Institute of Australasia

Michael Sukkar MP (Lib) – former senior consultant, PricewaterhouseCoopers

Matt Canavan SEN (Nat) – former senior executive, KPMG 

Note: Employment descriptions are ones that have been used by MPs & Senators themselves as of 28/04/18

Saturday, 28 April 2018

Quotes of the Week



“He’s nothing but a pre-Fitzgerald corruption inquiry Queensland walloper”  [An anonymous Liberal MP speaking of Australian Minister for Immigration and Border Protection Peter Dutton, quoted in The Saturday Paper by journalist Paul Bongiorno, 21 April 2018]


“The Liberals complaining that ASIC is sleep is rich considering who administered the fucking anaesthetic.”  [Journalist Richard Chirgwin, Twitter, 23 April 2018]


“At the same time, returns to the AEC show that these same corporations paid a total of $21,733,192 in political donations to political parties with Westpac standing out with donations totalling of nearly $12 million during the 2014-15 financial year alone.“  [Campaigner Rosie Williams, in “What can open data tell us about Australia’s major banks?”, 20 April 2018]

Friday, 27 April 2018

Nationals MP for Page Kevin Hogan jumps on the bandwagon now royal commission is revealing truths about Australian banking, finance and insurance sectors


There has been some 'emergency' repositioning occurring in Turnbull Government circles since Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry hearings began to reveal the extent of bad behaviour in the banking, finance and insurance sectors.

Former money market and bond trader with State Bank of NSW & Colonial State Bank,
former investment officer with the Australian Catholic Superannuation and Retirement Fund, former accountant and current Nationals MP for Page, Kevin Hogan, joined in on 20 April 2017.

Posting a video clip of what appears to be the one occasion he openly expressed disappointment with a bank during a committee hearing last year.


Note: For those interested in the exact wording of the exchange Hogan posted it on YouTube on 9 March 2017.


Even though Hogan was on the House of Representatives Standing Committee on Economics when it conducted a 2016-17 inquiry into Australia’s four major banks and the Committee's recommendations clearly showed that the inquiry revealed serious deficiencies in bank practices, he has never been on his feet in the House of Representatives calling the banks out for unethical behaviour or supporting a call for a royal commission.

He certainly never voted for the creation of such a royal commission in October 2016 or June 2017.

Perhaps because the National Party of Australia has received over $1.15 million in political donation from the banking, finance and insurance sectors since the 2012-13 financial year - and MPs probably expect more donations ahead of the forthcoming federal election?


Mr. Hogan might allow himself to become a little more animated in his disapproval given some of the evidence involves the actions of independent financial advisers such as the jaw dropping example set out below,

But maybe not. There might be a smidgen of fellow feeling there, because Kevin Hogan just like the hapless Sam Henderson was also an independent superannuation consultant and before that had a regular financial segment on Sky News.  

ABC News, 24 April 2018:

A public servant was impersonated while receiving financial advice from a high-profile financial planner, the banking royal commission has heard.

Donna McKenna, who is a Fair Work commissioner, told the inquiry she went to firm Henderson Maxwell after seeing its chief executive Sam Henderson in the media.
Ms McKenna said if she had followed the advice Mr Henderson gave her, she would have lost $500,000.

Mr Henderson followed Ms McKenna in the witness stand.

The financial planner is a regular media personality, with a show on Sky News Business channel and articles published in the Australian Financial Review and Money Magazine.

Mr Henderson's appearance before the commission did not get off to a good start, when it was revealed he does not have a Master of Commerce degree, as stated in a 2016 financial services guide from the firm.

The hearing was then played a damning recording of a Henderson Maxwell employee impersonating Ms McKenna in several phone calls to her super fund.

In the recordings, the employee can be heard giving Ms McKenna's membership number and the State Authorities Superannuation Scheme (SASS) representative refers to her as Donna….

he inquiry heard up to six phone calls were made to the SASS super fund by Henderson Maxwell's customer service officer.

Mr Henderson said the information his employee had provided him about Ms McKenna's account was inconsistent with the information given to him by Ms McKenna.

Mr Henderson refunded Ms McKenna the nearly $5,000 in upfront advice fees she had paid.

The customer service officer who impersonated Ms McKenna was not fired…..

Ms McKenna made a complaint to the Financial Planning Association (FPA) about the quality of the advice.

Despite complaining in March last year, the complaint is still not finalised.

The inquiry heard Mr Henderson responded to the complaint in a lengthy letter to the FPA, describing Ms McKenna as "nitpicky" and her complaint as a "barrage of aggressive and presumptive accusations".

In March this year, Mr Henderson proposed a deal with the FPA that would see him admit to multiple failings in the financial advice he provided to Ms McKenna and agree to implement a number of changes at the firm.

The deal would have also required the FPA to agree to not publish Mr Henderson's name in relation to the proceedings.

The FPA wanted an additional provision that would prevent Mr Henderson appearing in the media for a year.

That proposal was not acceptable to Mr Henderson and the complaint has not yet been formally resolved…..

Wednesday, 25 April 2018

As the federal govenment burns are Turnbull and Co. just tinkering at the edges of banking and finance regulations or are they seriously committed to reform?



Way back in October 2016 the Australian Securities and Investments Commission (ASIC) began an Enforcement Review which examined the adequacy of legislation dealing with corporations, financial services, credit and insurance, with regard to serious contraventions in the financial sector, including fraud and criminal activity.

0n 18 December 2017 ASIC handed its Enforcement Review Report to the Turnbull Government.

It was probably no accident that four days earlier the same government ceased its sustained opposition to a highest level inquiry and created the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

With the extent of bank money laundering becoming an issue and the review report on its doorstep there was nowhere else to turn, given the average voter would not have been receptive to the argument that the big banks were historically a protected species because of their generous political donations.

In April 2018 in the midst Royal Commission revelations concerning a host of bank and financial system abuses the Turnbull Government finally released its response to the ASIC review report.

This response "agrees" with or gives "in principle agreement" to all 50 recommendations but has placed 20 recommendations on the backburner.

Knowing that ASIC’s investigative abilities has been crippled by funding/staff cuts, that entities with annual profits in the billions just seem to shrug off large corporate fines, often indemnify executives in relation to individual fines and are able to play the legal system so that executives rarely see the inside of a prison, on 20 April the Turnbull Government via the Minister for Revenue and Financial Services revealed that by legislative amendments it will implement the potential for larger individual and corporate fines and double potential maximum prison sentences:

The Turnbull Government is strengthening criminal and civil penalties for corporate misconduct and boosting the powers of the Australian Securities and Investments Commission (ASIC) to protect Australian consumers from corporate and financial misconduct.

These stronger new penalties will ensure that those who do the wrong thing will receive appropriate punishment.

These reforms represent the most significant increases to the maximum civil penalties, in some instances, in more than twenty years. They bring Australia's penalties into closer alignment with leading international jurisdictions, and ensure our penalties are a credible deterrent to unacceptable misconduct.

The Government will increase and harmonise penalties for the most serious criminal offences under the Corporations Act to a maximum of:

For individuals: (i) 10 years' imprisonment; and/or (ii) the larger of $945,000 OR three times the benefits;

For corporations: (i) the larger of $9.45 million OR (ii) three times benefits OR 10% of annual turnover.

The Government will expand the range of contraventions subject to civil penalties, and also increase the maximum civil penalty amounts that can be imposed by courts, to the maximum of:

the greater of $1.05 million (for individuals, from $200,000) and $10.5 million (for corporations, from $1 million); or

three times the benefit gained or loss avoided; or

10% of the annual turnover (for corporations).

In addition, ASIC will be able to seek additional remedies to strip wrongdoers of profits illegally obtained, or losses avoided from contraventions resulting in civil penalty proceedings.

ASIC's powers will also be significantly increased through:

expanding their ability to ban individuals from performing any role in a financial services company where they are found to be unfit, improper, or incompetent;

strengthening their power to refuse, revoke or cancel financial services and credit licences where the licensee is not fit or proper; and

boosting ASIC's tools to investigate and prosecute serious offences by harmonising their search warrant powers to provide them with greater flexibility to use seized materials, and granting ASIC access to telecommunications intercept material.

The Turnbull Government is committed to ensuring ASIC is armed with greater powers to effectively deter, prosecute, and punish those who do the wrong thing, to improve community confidence and outcomes for consumers and investors in the financial services and corporate sector.

These reforms come on top of strong Government action to reform our financial services sector to better protect Australian consumers over a number of years.
The Government has already provided $127 million in additional funding to ASIC to bolster its investigative and surveillance capabilities; implemented an industry funding model for ASIC to give it secure funding; appointed a new chairman for ASIC, Mr James Shipton, and announced a new second Deputy Commissioner with an enforcement focus, Mr Daniel Crennan QC; established a new standards setting body for financial advisers; and established a new one stop shop for consumer complaints which is free for consumers, binding on financial institutions and can order compensation where appropriate.

Today's reforms to ASIC's powers and penalties follow recommendations made by the ASIC Enforcement Review Taskforce (The Taskforce). The Taskforce was established in October 2016 to fulfil the Government's commitment to review the adequacy of ASIC's enforcement regime in response to the Murray Financial System Inquiry, and provided its report to Government in December 2017.

The Government has agreed, or agreed in principle, to all 50 of the Taskforce recommendations and will prioritise the implementation of 30 of the recommendations.

The remaining 20 recommendations relate to self-reporting of breaches, industry codes and ASIC's directions powers, which will be considered alongside the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The Government thanks all the members of the Taskforce, including the Panel of Experts, Treasury, ASIC, Attorney-General's Department, Commonwealth Director of Public Prosecutions, as well as all stakeholders who participated in the consultation of the various position papers put forward by the Taskforce.

The Government's full response to the Taskforce Report can be found on the Treasury website.


Friday, 20 April 2018

Turnbull Government will ignore this call to extend Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry at its own electoral peril


Remember When Australian Prime Minister and former merchant banker Malcolm Bligh Turnbull ruled out a bankig royal commission?

Telling the nation; "I can tell you wehave as a government decided not to have a royal commission, we made thedecision a long time ago, not because we don't believe there is nothing goingon in terms of problems with the banks, it is because we want to take actionright now and we are".

Recall the time and other limits placed on the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry when it was finally established on 14 December 2017? Giving it the power to ignore anything that it wanted to that would otherwise be within its scope. 

Well things did not go entirely to plan for Malcolm and his banker mates.

Because since13 March 2018 the curtain has been drawn back revealing the systemic unethical, deceitful, rapacious, sometimes fraudulent and, in certain instances criminal behaviour, of the financial sector.

National Australia Bank, Westpac, St George, Citibank, ANZ, AMP Insurance and the Commonwealth Bank of Australia, along with their financial services spin-offs, had all come under some degree of scrutiny by mid-April with more hearings still sheduled.

So it comes as no surprise that Fairfax Media is now saying what many are thinking.............

The Age, 18 November 2018:

Evidence to the fledgling financial services royal commission confirms the inquiry, long-resisted by the Coalition government and the banks, was justified and suggests it will lead to rigorous reforms. It also suggests the government’s decision to limit the probe to one year should be reviewed.

A damning admission by a top executive of what was once one of the nation’s most trusted institutions, AMP, about his company repeatedly lying to the corporate regulator about condoned client fraud intensifies concerns about one of the most crucial industries.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is only in its third week, but there has been a plethora of testimony to unethical and/or illegal practices including: charging clients for wilfully undelivered services; fraud; manipulating ‘‘independent’’ audit information; selling clients irrelevant insurance and financial products (many of them in-house); failing to declare commissions; refusing to honour insurance contracts; rigging interest rate markets; and failing to make proper checks before granting loans.

The banks long argued the malfeasance was the result of ‘‘a few bad apples’’, a position that became untenable as bountiful evidence, much of it revealed by The Age, implicated the companies’ very culture.....

Thursday, 19 April 2018

None of the financial institutions are coming away from this Royal Commission covered in glory


The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established on 14 December 2017, is due to hand down an interim report no later than 30 September 2018 followed by a final report by 1 February 2019.

As of 13 April 2018 the royal commission has received 3,433 public submissions - 69% of these were Banking, 8% Superannuation 8% and 7% Financial Advice.

Round 2 public hearings finish on 27 April 2018.

View the live webcast or previous hearings.

Yesterday was the Commonwealth Bank of Australia's turn to reluctantly admit systemic fraud ....

The Guardian18 April 2018:

Counsel assisting the royal commission, Mark Costello, asked Linda Elkins, from CBA’s wealth management arm Colonial First State, to confirm CBA’s poor record of charging fees for no service.

“It would be the gold medallist if [the corporate regulator] was handing out medals for fees for no service, wouldn’t it?” Costello asked.

Elkins replied: “Yes.”

The commission was told that from July 2007 to June 2015 clients of CBA’s Commonwealth Financial Planning, BW Financial Planning and Count Financial businesses were routinely charged ongoing fees for financial advice where no advice services were provided.

CBA has had to refund $118.5m to customers – more than half the $219m in compensation paid by the big four banks and AMP over the past decade – to more than 310,000 financial advice customers.

ABC News, 18 April 2018:

Michael Hodge QC observes that Commonwealth Financial Planning has had a 100 per cent increase in clients over the past decade but a 25 per cent drop in the number of advisers.

He asks CBA's Marianne Perkovic whether the bank had any concerns that clients were not receiving adequate attention because of the decline in advisers, while client numbers doubled.

This is in the context of ASIC's concern that some firms were taking on too many clients for the number of planners. 

Ms Perkovic struggles to provide a clear answer.......

After disputing the meaning to be attributed to internal memos between the bank's senior managers in early 2012, Ms Perkovic eventually had to admit that a Deloitte report handed to CBA in July 2012 revealed systemic problems in ensuring that customers weren't being charged for financial advice they did not receive.

Deloitte had found that at least $700,000 in ongoing service fees were being charged to more than 1,050 clients that were allocated to more than 50 inactive financial planners who had left the business before 2012.

It appears that Ms Perkovic was finally ground down by relentless questioning from Michael Hodge QC, warnings from Commissioner Kenneth Hayne and the irrefutable evidence of the Deloitte report.