Tag: Coronavirus

ASIC Re-calibrates Its Regulatory Priorities

In coordination with the Council of Financial Regulators, ASIC will focus its regulatory efforts on challenges created by the COVID-19 pandemic. Until at least 30 September 2020, the other matters that ASIC will afford priority are where there is the risk of significant consumer harm, serious breaches of the law, risks to market integrity and time-critical matters.

ASIC is committed to working constructively and pragmatically with the firms we regulate, mindful they may encounter difficulties in complying with their regulatory obligations due to the impact of COVID-19.  

ASIC has immediately suspended a number of near-term activities which are not time-critical. These include consultation, regulatory reports and reviews, such as the ASIC report on executive remuneration, updated internal dispute resolution guidance and a consultation paper on managed discretionary accounts. Stakeholders will shortly be notified of deferred consultation and publications relevant to them. 

ASIC will also suspend its enhanced on site supervisory work such as the Close and Continuous Monitoring Program.

In issuing information-gathering notices, ASIC has provided new guidance to our staff – mindful that many notice recipients may be facing significant disruption.

By taking these actions, industry participants will be better placed to focus on their immediate priorities and the needs of their customers at this difficult time.

Where warranted, relief or waivers from regulatory requirements will also be provided. This will include requirements on listed companies associated with secondary capital raisings and audits. ASIC has already indicated a ‘take no action’ stance in relation to the timing of AGMs until 31 July and the conduct of AGMs by electronic means.  

ASIC will also work with financial institutions to further accelerate the payment of outstanding remediation to customers.

ASIC will take account of the circumstances in which lenders, acting reasonably, are currently operating when administering the law.

ASIC will maintain its enforcement activities and continue to investigate and take action where the public interest warrants us to do so against any person or entity that breaks the law. However, it will focus on action necessary to prevent immediate consumer harm, egregious illegal conduct and other time critical matters.

Key business as usual functions will be maintained including registry operations and services, receipt of whistleblower, breach and misconduct reports and general contact points for industry.

Government Relaxes Responsible Lending Obligations

The government has announced a relaxing of responsible lending obligations as they pertain to business lending, in order to ensure small businesses can access credit quickly and efficiently in the coming months.  Via Australian Broker.

As it stands, responsible lending obligations don’t apply to lending predominantly for business purposes; however, in order for a loan to fall within this exclusion, a lender is required to undertake due diligence to confirm the money borrowed meets this test.

Now, the government is changing this through providing an exemption from responsible lending obligations for a period of six months, in relation to the credit lenders extend to their existing small business customers so long as:

  • There is an existing borrowing relationship
  • Some proportion of that credit is used for business purposes

The exemption will apply to new credit, credit limit increases and credit variations and restructures.

The government recognised the “environment for small business has changed and continues to evolve with the rapidly-evolving challenges posed by the coronavirus”. 

The revision is intended to enable lenders to move quickly to support small businesses, at a time when prompt action has become more crucial than ever. 

Credit providers regulated by APRA will remain subject to APRA’s prudential standards while the exemption applies, and providers who subscribe to an industry code will remain obliged to abide by that code. 

The Morrison Government has promised it will continue to work with the banking industry and the financial regulators to support Australian jobs and businesses moving ahead. 

White House Emergency Request Balloons to $242 Billion

A $46 billion emergency supplemental funding proposal the White House budget office submitted to Congress last week to battle the coronavirus outbreak has ballooned to $242 billion in the Senate amid frenzied negotiations. Lawmakers remain deadlocked on several key provisions.
Via The Hill.

A summary of the supplemental spending legislation provided to stakeholders by the Senate Appropriations Committee says it would provide $75 billion for hospitals, $20 billion for veterans’ health care, $11 billion for vaccines, therapies and diagnostics and $4.5 billion for the Centers for Disease Control and Prevention. 

More than 75 percent of the $242 package — approximately $186 billion — will go to state and local governments, fulfilling a central Democratic demand to bail out cash-strapped states such as New York.

The supplemental would also provide $20 billion for public transportation emergency relief, $10 billion for airports and $5 billion for the Federal Emergency Management Agency disaster relief fund, according to the summary document. 

Other items include $12 billion to the Pentagon, $10 billion in block grants to states, $12 billion for K-12 education and $6 billion for higher education.

The pending Senate appropriations measure is significantly larger than the $45.8 billion request the Office of Management and Budget submitted earlier this week to “address ongoing preparedness and response efforts.”

A huge chunk of the money, $119.4 billion, would go to the Departments of Labor, Health and Human Services, Education and related agencies.

The Departments of Transportation, Housing and Urban Development and related agencies would receive $48.5 billion. 

Coronavirus Shutdowns Ahead

According to the New Daily, Victoria to close schools and NSW is to shut restaurants, and pubs; and cross-border controls will be in place.

Australia is fragmenting as the coronavirus sees state borders closed and premiers embrace sweeping lockdowns.

In what is confirmation Australians must prepare to face the country’s most extreme virus safety measures to date, NSW Premier Gladys Berejiklian has declared non-essential services will shut down within 48 hours.

Victoria also confirmed just before 3pm Sunday (local time) that schools would shut on Tuesday and there will be progressive closures of businesses such as pubs and restaurants.

Schools in NSW will remain open on Monday, but the premier is likely to make further announcements on education in the days to come.

ACT Chief Minister Andrew Barr announced that the territory would follow the lead of NSW as it was “impossible” to have different arrangements from the surrounding region.

Victorian Premier Daniel Andrews made a similar announcement to the NSW premier, confirming “non-essential” services will be forced to close.

“This is not something that we do lightly,” Mr Andrews said.

“But it’s clear that if we don’t take this step, more Victorians will contract coronavirus, our hospitals will be overwhelmed, and more Victorians will die.”

Supermarkets, petrol stations, pharmacies, convenience stores, and freight service – including home delivery of food – will remain open across Victoria and NSW.

Victorian Premier Daniel Andrews released this statement on Sunday afternoon.

Political leaders are meeting on Sunday night to consider urgent powers that would see citizens banned from travelling between suburbs and in between so-called COVID-19 “red zones”.

“Tonight I will be informing the National Cabinet that NSW will proceed to a more comprehensive shutdown of non-essential services,” Ms Berejiklian said in a statement.

“This will take place over the next 48 hours.”

NSW Health on Sunday confirmed 97 new COVID-19 cases, bringing the state’s tally to 533.

Authorities have still not been able to work out the source of infection for 46 of those cases, but they do know those people became infected within Australia.

The NSW Premier confirmed the strict rules would be rolled out in the next 48 hours.

Victorian cases jumped by 67 overnight and the government confirmed there had been outbreaks in regional areas including Warrnambool and the Surf Coast.

The call to shut down schools goes against the advice from the federal government.

Prime Minister Scott Morrison persisted with the message for the past week that the health advice was that it was best to keep children at school.

The advice from the PM caused widespread confusion among teachers and parents, with many questioning why Australians were told to ‘social distance’ yet send kids to class.

The call by Mr Andrews makes Victoria the first state to officially close classroom doors to stop the spread of coronavirus.

Children in other nations have already stopped going to school.

The Victorian government said it was bringing forward the school holidays.

It remains to be seen whether the ban on physical class attendance will extend into term two.

Meanwhile, South Australia has confirmed it will effectively close its borders in a bid to stop the spread of COVID-19 following an outbreak within a group of tourists travelling around the Barossa Valley.

Premier Steven Marshall announced on Sunday that anyone entering the state would be subject to a mandatory 14-day isolation period.

The measures will take effect from 4pm on Tuesday.

“The health of South Australians is unquestionably our No.1 priority and that is why we are acting swiftly and decisively to protect them from the impact of this disease,” he said.

“We do not make this decision lightly but we have no choice”.

South Australia’s borders will be monitored 24 hours a day and anyone entering the state will be forced to sign a declaration agreeing to self-isolate.

State authorities moved to declare a “major emergency” on Sunday, triggering the shutdown.

But Police Commissioner Grant Stevens admitted authorities were limited in their ability to enforce the isolation orders.

SA Police have been checking on those who have already been ordered to self-isolate after disembarking international flights.

He said authorities were “relying on people’s community and sense of goodwill to do the right thing”, and that overwhelmingly people had been complying with orders.

Similar restrictions have been put in place in Tasmania and the Northern Territory.

In the NT, there are major fears for indigenous communities.

Shields Up: Second Stimulus Package Worth $66bn But Only 13% Total To Date For Households

The Prime Minister And Treasurer released their second stimulus package today which is designed to shield the country from the current emergency, and to keep businesses from collapsing for at least the next 6 months. But a warning, watch how the RBA measures have been rolled into the total support now valued at $189 billion. This is deceptive. They want to make it look like a big number. It is not, yet!

In summary, small businesses can receive cash payments up to $100,000 and some welfare recipients will receive another $750 in payments, as Newstart is repurposed temporarily.

It builds on the measures included in the first $17.6 billion economic stimulus package announced more than a week ago.

ScoMo said “We cannot prevent all the many hardships, many sacrifices that we will face in the months ahead.

He made the point that the health-related issues are leading to a range of broader economic issues, as never before. The total packages are now worth around 9.7% of GDP – or around $189 billion dollars, and Treasury modelling indicates benefits to the national accounts in the June and September quarters to offset the big falls elsewhere. No one knows where results will land. But within that, $90 billion reflects the RBA’s liquidity injections, so the true Government direct support is much lower than advertised.

The UK initiatives, we recently discussed were 15% of UK GDP, so we are still doing things on the cheap in my view. More direct support for households needs to come.

The new measures include:

  • Temporarily doubling the Jobseeker Payment, previously called Newstart
  • Allowing people to access $10,000 from their superannuation in 2019-20 and 2020-21
  • Guaranteeing unsecured small business loans up to $250,000
  • Reducing deeming rates by a further 0.25 per cent

A second $750 payment will be automatically paid to an estimated 5 million people on July 13 on welfare. The first $750 payment, announced in the first stimulus package, will be paid on March 31.

The Government will temporarily double the Jobseeker Payment, previously called Newstart, providing people with an additional $550 a fortnight.

The payment will be available to sole traders and causal workers, provided they meet income tests. The Government will waive asset tests and waiting periods to access the Jobseeker Payment.

The Prime Minister said that “the nature of these payments and the purpose of these payments are changing.” to provide additional income support for vulnerable groups.

For small businesses and Not-for-profits with a turnover under $50 million can receive a tax-free cash payment of up to $100,000, with a minimum payment of $20,000 for eligible companies.

The Government says 690,000 businesses employing 7.8 million people and 30,0000 not-for-profits will be eligible for measures in the stimulus package. The payments will be delivered by the Tax Office as a credit on activity statements from late April.

In an agreement with the banks, the Commonwealth is also offering to guarantee unsecured loans of up to $250,000 for up to three years to businesses, interest free for 6 months.

In response the CBA said “The Commonwealth Bank will support as many of the Government supported loans as possible and in doing so make available up to $10 billion of additional unsecured credit to support small and medium businesses.” The ABA welcomed the move saying ” Banks stand ready to help their business customers get through this, whether it’s deferring their loan payments or providing more working capital.  Today’s announcement of a second stimulus package, which includes an SME Guarantee scheme, will mean access to funds to see small businesses through this downturn”. 

The Government will allow people to access up to $10,000 from their superannuation this financial year and in 2020-21.

People will not pay tax on they money they access and withdrawals will not affect Centrelink or veterans’ payments.

There will also be a temporary 50-per-cent reduction in superannuation minimum drawdown requirements for account-based pensions in 2019-20 and 2020-21.

On top of the deeming rate changes made at the time of the first package, the Government is reducing the deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA. As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent. The change will benefit around 900,000 income support recipients, including Age Pensioners. This measure is estimated to cost $876 million over the forward estimates period.

The Government is moving quickly to implement this package. To that end, a package of Bills is being introduced into Parliament on 23 March 2020 for urgent consideration.

Subject to passage of the Bills through Parliament, the Government will then move to immediately make, and register, supporting instruments.

The National Cabinet will meet tonight to find a way to force Australians to adhere to social distancing, following the temporary closure of Bondi Beach after people failed to adhere to government spacing requirements.

There were clear signals of more draconian measures should people not keep their distance. The Government also said not to travel unless it was essential. Reality is slowly catching up with the community, but many are still looking the other way.

UK To Support Employee Wages Direct

The UK has taken unprecedented actions to support households and businesses. It will be interesting to see what the Australian Government comes out with when they announce theirs. The UK is providing wages support, rental support, and more support for the small business sector.

Capital Economics said that it expected the unemployment rate to rise from just under 4% to about 6% due to the crisis. However, without this latest government intervention, that rate would have risen to the financial crisis level of 8%.

The UK Government has announced a new Coronavirus Job Retention Scheme. Any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme. But it does not cover those on zero hours contracts, or are self employed.

Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month – that’s above the median income. Employers can top up salaries further if they choose to.

Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off.

The Treasurer said “that means workers in any part of the UK can retain their job, even if their employer cannot afford to pay them, and be paid at least 80% of their salary”.

The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and will be open initially for at least three months – and I will extend the scheme for longer if necessary.

There is no limit on the amount of funding available for the scheme.

In addition he announced that the Coronavirus Business Interruption Loan Scheme will now be interest free for twelve months, not 6 months.

And a further cash flow support through the tax system for businesses was announced, buy deferring the next quarter of VAT payments.

That is a direct injection of £30bn of cash to employers, equivalent to 1.5% of GDP.

They will be launching in the coming days a major national advertising campaign to communicate the available support for businesses and people.

To strengthen the safety net, the Universal Credit standard allowance, for the next 12 months, will be lifted by £1,000 a year, as well as increasing the Working Tax Credit basic element by the same amount

Together these measures will benefit over 4 million of our most vulnerable households.

As a result, every self-employed person can now access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.

Taken this amounts to nearly £7bn of extra support through the welfare system to strengthen the safety net and protect people’s incomes.

UK homeowners can get a three-month mortgage holiday if they need it.

They also announced nearly £1bn of support for renters, by increasing the generosity of housing benefit and Universal Credit, so that the Local Housing Allowance will cover at least 30% of market rents.

They called these actions “an unprecedented economic intervention to support the jobs and incomes of the British people”.

Further measures will be announced next week, to ensure that larger and medium sized companies can also access the credit they need.

He said “we want to look back on this time and remember how, in the face of a generation-defining moment, we undertook a collective national effort – and we stood together”.

NAB Support For Businesses And Homeowners

NAB has today announced a sweeping support package for business and personal customers at a time when they need it most.

Business customers experiencing financial difficulty can defer their payments on a range of floating and variable rate business loans for up to six months. Home loan customers experiencing financial challenges will also be able to pause their repayments for up to six months.

NAB, which is Australia’s largest bank for businesses, will cut 200bps from the rate on new loans and all overdrafts on its flagship digital business product QuickBiz, effective March 30.

It will reduce variable rates on small business loans by 100bps, effective March 30 – on top of the 25bps reduction announced on March 13.

NAB also announced reductions of up to 60bps to fixed rate home loans to give customers the option of added certainty.

There are no changes to home loan variable rates. For depositors, NAB has introduced a 10-month term deposit rate of 1.75% p.a. in recognition that this low interest rate environment is hurting savers.

This package could provide a potential injection of more than $10 billion into the economy over six months, or $380 million a week, depending on customer needs and take-up.

NAB CEO Ross McEwan said: “Our focus is clear – to support our business and personal customers with their financial needs when they need it most.

“These measures will provide significant relief to businesses and homebuyers over the next six months as we all deal with this unprecedented situation.

“Businesses in particular need help and they need it now, so we have come through with a range of measures. This support will provide cash flow relief so they can stay open, and keep people in jobs. One third of Australia’s small to medium businesses bank with NAB and we are going to be there for them.

“The changes also offer our home loan customers the option to fix their rate at our lowest rate ever, or pause payments to help ease financial pressures.”

The support package announced by NAB is in addition to industry-wide measures announced earlier today by the Australian Banking Association.

“We support the measures announced by the ABA today and welcome recent actions taken by the Federal Government, Reserve Bank of Australia and APRA. We will continue to work with the Government and regulators on further initiatives,” Mr McEwan said.

“This is an extremely difficult time but we will get through this together. For more than 160 years, NAB has supported Australians through challenges. We are well-capitalised and stand ready to play our critical role.

“NAB is open for business. We continued lending throughout the Global Financial Crisis and we’ll continue to lend through this.”

Mr McEwan encouraged customers to call NAB to discuss how they may be able to access the relief package. “If any customer has questions or concerns contact your banker now – please don’t wait,” he said.

The full list of measures announced by NAB is:

NAB Business customers will be able to:

  • Defer principal and interest for up to six months on a range of business loans, including floating and variable rates, and equipment finance loans;
  • Receive a 200-basis point rate cut on new loans and all overdrafts on QuickBiz, effective March 30;
  • Receive an additional 100-basis point reduction on variable rates for small business loans, effective March 30. This is on top of a 25-bps reduction earlier this month;
  • Access up to $65 billion of additional secured limits to pre-assessed customers, with $7 billion currently available for fast assessment process;
  • Access up to $9 billion in additional limits for unsecured lending for existing customers via QuickBiz; and
  • Defer business credit card repayments.

NAB Personal customers will be able to:

  • Pause home loan repayments for up to six months, including a three-month checkpoint. For a customer with a typical home loan of $400,000, this will mean access to an additional $11,006 over six months, or $1,834 per month.
  • Access a 10-month term deposit rate of 1.75% p.a. for 10 months, effective March 24. This is for personal customers only, with deposits of $5,000 to $2 million.
  • Access fixed home loan rates of 2.39% p.a. for 1-year, 2.29% p.a. for 2- and 3-year, and 2.79% p.a. for 5-year (owner-occupier P&I), effective March 25. First home buyers will have access to a rate of 2.19% p.a., fixed for two years. This delivers reductions of between 10 and 60bps (table below).
  • Access over $20bn in redraw and more than $30bn in offset. Note: Around 1 in 2 accounts are at least 6 months ahead based on redraw & offset balance; and 4 in 10 are 12 months ahead.
  • Reduce repayments on variable rate loans. Over the past 12 months, reductions of 84bps to our owner-occupier variable rates have provide a potential benefit of $3,360 per year to customers with a $400,000 loan. Most customers have not yet taken the option to reduce their payments.

NAB’s advertised package home loan fixed rates change as follows, from 25 March 2020:

Australia Shuts Borders

All non-citizen, non-resident travellers will be banned from entering Australia, as the government attempts to get a handle on the coronavirus outbreak.

“We believe it is essential to take a further step to ensure we are now no longer allowing anyone, unless they are a citizen or resident or direct family member,” Scott Morrison said in an address on Thursday afternoon.

The government’s reasoning is that a significant majority of cases are not contracting the virus through community transmission, but by contact with someone who has recently travelled from overseas.

“The reason for this decision is about 80 per cent of the cases we have in Australia are either the result of someone who has contracted the virus overseas or someone who has had a direct contact with someone who has returned from overseas,” he said.

Earlier this week, the government announced all Australians currently overseas should return home immediately, using commercial flights