A new UBS report has said that regulators getting tougher on capital is a threat to dividends, particularly those of the major banks. Via InvestorDaily.
UBS
reported that it was cautious on the Australian big four banks as the
low rates environment made it harder for the banks to generate a lending
spread and challenged the return on equity.
“If the housing
market does not bounce back quickly, this could put material pressure on
the banks’ earnings prospects over the medium term, implying that the
dividend yields investors are relying upon come into question once
again,” said the report.
Recent regulatory actions had also not
helped the outlook, with the recent confirmation by APRA that it was
going ahead with its proposal to reduce related party exposure limits to
25 per cent, in a move already impacting one bank’s capital abilities.
ANZ
announced shortly after the confirmation that it would have limited
capacity to inject fresh capital into NZ as its NZ subsidiary would be
at or around the revised limit.
The
$500 million operation risk change for ANZ, NAB and WBC would lead to a
16-18 bps reduction in CET1, with Westpac revealing in its third
quarter report that it was running thin on capital, with UBS reducing
it’s CET1 forecast in the bank to just 0.49 per cent, below APRA’s
unquestionably strong minimum.
Of the major banks, UBS estimated
that Commonwealth Bank was the in the best capital position, followed by
ANZ, but both NAB and Westpac were in trouble.
Part of the
capital position of CBA and ANZ was due to asset sales that would boost
sales; however, UBS did note that these divestments had not yet been
completed and there was uncertainty around its settlement.
UBS
said many of these behaviours were due to APRA’s interpretation of the
Murray report that said the regulator should set capital standards that
kept institutions unquestionably strong.
“This recommendation,
which was subsequently accepted by the government, was interpreted by
APRA to mean that the major banks’ level 1 CET1 ratios are at least 10.5
per cent.
“However, we believe that if the Australian banks
(level 1) hold substantial positions in their New Zealand subsidiaries,
which are treated as a 400 per cent risk weight rather than a capital
deduction, then double-gearing of capital brings this ‘unquestionably
strong’ mandate set by the FSI into question.”
UBS said a simpler
test was needed to ensure banks did not become overly reliant on capital
repositioning strategies, which effectively double-counted capital in
Australia and New Zealand.
Until this was done, UBS predicted
that banks would continue to cut dividends and that investors would see
through various strategies to ensure double-gearing did not occur.
“We expect CBA and WBC to join ANZ and NAB in cutting dividends should rates continue to fall.”
While the global economy is a while away from a recession the dominos are beginning to fall and may eventually all topple over according to JPMorgan. From Investor Daily.
Global
market strategist at JPMorgan Kerry Craig said that his market case was
not for a recession but there were elements to look out for.
“The
dominos have started to fall but we are nowhere near a recession which I
think is the important thing. There is moderately more risk around a
recession but what keeps us confident is the policy response,” he said.
Mr
Craig said the chips that were still standing were employment and
consumption and if those two fell that’s when it was time to worry.
“The
thing that really props up the economy and keeps things ticking over is
consumption and if consumption starts to flag or fall that’s when we
really start to worry about a recession,” he said.
However,
people had to be careful not to look at every market change as a cause
for concern because that would have negative implications too.
“The
expansion has been going for more than a decade and it’s like a volcano
that doesn’t erupt, every time you get a new rumble around a weakness
after such a long period of time we worry that it’s going to be the big
one and that’s what is going to create that recession,” said Mr Craig.
The
consumer was the pillar still holding up the economy as consumer
sentiment was strong and people were still spending, and when they count
for 60 per cent of economic growth it accounts for a lot of sway said
Mr Craig.
“The government and the RBA want us to keep spending
money. The reason why the RBA cuts rates to keep money cheap is so we go
out and spend more of it to create economic activity and to generate
inflation,” he said.
The RBA probably had one more rate cut in them said Mr Craig, but they weren’t going to rush into it.
“They
want to see what happens with the tax changes and how that affects
consumption and the housing market and how prices start to change and
assess what happens internationally in this whole trade war with US and
China,” he said.
They won’t want to spend all this political capital right now and cut rates again but if they need to, they will.”
The
reason they would wait is because the Australian economy was not in a
bad shape as the RBA had kept making sure to reiterate.
RBA
Governor Philip Lowe has said as much with each rate cut, even in his
last decision he said: “The central scenario for the Australian economy
remains reasonable, with growth around trend expected. The main domestic
uncertainty continues to be the outlook for consumption, although a
pick-up in growth in household disposable income is expected to support
spending.”
Mr Craig said the RBA was quite positive about the
economy and really the only place they had changed their thinking was
around spare capacity in the economy.
“Look at employment
conditions in the economy, if they continue to soften then the RBA will
cut rates and it’s that simple,” he said.
The open banking regime officially began yesterday with the four major banks offering data on a variety of products as part of the regime’s roll-out, via InvestorDaily.
The
four major banks had a deadline of 1 July to make product data
available on all credit and debit card, deposit and transaction accounts
with more products to follow.
By February, first mortgage data
will have to be available, with eventually all products being available
for the major banks by 2020. 1 July 2020 is the start date for all other
banks to begin offering their credit and debit card product data with
an end date of 2021.
Customer data will be included in the regime
by 1 February 2020, which will allow consumers to more fully control
their data and enable greater transparency and competition throughout
the industry.
Open banking has been sweeping across the world, with the most relatable example for Australia being the UK open banking regime.
The
UK introduced theirs following an exposure of poor practice, not
dissimilar to Australia. Where it differs though is that the UK regime
applies to only nine banks, whereas Australia’s will apply to all ADIs.
The
Australian regime only grants read-only access to data with reciprocal
obligations and an eventual plan to open to other industries, such as
utilities.
What it will eventually mean is that customers of a
bank can request or give consent for their data to be shared with an
accredited third party, such as a bank, financial services provider,
utility provider or a telecommunications provider.
The regime will
break down the barriers consumers have faced in finding the best
banking products and eventually switching to that provider.
Commonwealth
Bank’s general manager of digital banking, Kate Crous, told Investor
Daily that the bank was supportive of the model that puts customers in
control and had worked hard to ensure they were ready.
“We have
worked hard with regulators and other industry participants to ensure
the Consumer Data Right regime will be successful, particularly in
building consumer trust and confidence around the use and exchange of
their data.
“The first milestone is publishing product information
via an application programming interface (API) from 1 July 2019. This
will enable an easier comparison of banking products from financial
institutions and allow the industry to test the APIs before sharing
consumer data next year,” she said.
Ms Crous said developers are now able to access information on how to integrate with the CBA APIs.
Westpac’s chief data and strategy officer, Jamie Twiss, said keeping data safe was crucial and the pilot was an important step.
“Westpac
is focusing on creating a trusted open banking regime that is secure,
flexible and easy to use for all Australians. The pilot program will lay
initial foundations to test the performance, reliability and security
of the system before any personal consumer data is shared. It will also
give software developers and fintechs a network of financial
institution’s data to build and improve financial services.”
Westpac
will provide generic information on product data as of today, which
will include interest rates, discounts, eligibility criteria, product
features and descriptions plus fees and charges.
A NAB
spokesperson told Investor Daily that their focus was on ensuring that,
as an industry, open banking worked for the consumer.
“This is a
complex change to the industry and the timelines are challenging, but we
firmly believe that speed shouldn’t compromise safety and customer
experience; getting it right is paramount to consumer trust and
confidence in the system,” NAB said.
The spokesperson
said NAB had actively started to develop processes since back in 2017 to
be ready for open banking and would continue to work with Data 61 and
ACCC.
Fintech response
Deputy chief
executive of neobanks Volt Luke Bunbury said it will mean that the
incumbent banks will need to innovate to compete with newer entrants.
“This
means the incumbent banks will have to innovate to compete, as there
will be a long line of fintechs and neobanks like Volt wanting to
harness this data to offer customers a superior banking experience.
“Customers
will be the masters of their data, and third parties will have to earn
it by being innovative and trustworthy,” he said.
Part of this was changing the narrative by offering an improvement to lives and not just the sale of products, said Mr Bunbury.
“Volt
and other innovative banks will be able to help Australians find and
secure better deals on a range of banking and even non-banking services,
like utilities and travel.
“By enabling data to be shareable
across financial institutions, it will be also possible for customers to
manage multiple bank accounts from one mobile app, regardless of
whether the accounts are held with rival banks,” he said.
Chief executive of Verrency David Link said the regime was going to eventually drive greater innovation.
“While
1 July 2019 will not drastically change the way Australians bank – as
only product, rather than customer, data will be available until 1
February 2020 – this is a huge step towards that much more
transformative change,” Mr Link said.
Banks would have to start to
offer a personalised consumer offering, said Mr Link, and those that
are agile were going to thrive.
“The effective use of data and
access to new value-added services will slowly become a major
decision-driver for consumers when it comes to choosing or changing who
‘owns their relationship’.
“Banks which don’t take this extremely
seriously are going to slowly struggle to remain competitive. On the
other hand, those which take steps to become more agile – especially in
their ability to deliver value around the consumer relationship – are
going to thrive in the post-open banking landscape,” he said.
The world is one step away from a global recession, according to UBS who has questioned if the markets are ready. Via InvestorDaily.
UBS
has released global research paper where the investment bank reveals it
is anticipating major changers to their forecasts, which would result
in a global recession.
“We estimate global growth would be 75bp
lower over the subsequent six quarters and that the contours would
resemble a mild ‘global recession’,” said UBS.
The cause behind this will be the continued escalation of the US-China trade war.
“Unless
a deal is struck soon, the global weighted average tariffs will reach
levels last seen in 2003 and the US weighted tariffs will revert to 1947
levels,” found UBS.
UBS
compared this recession to the Eurozone collapse or the mid-’90s
“Tequila” crisis as opposed to more recent events like the ’08 crash.
If
UBS is right on the growth impact, all major central banks would ease,
which we have already seen the RBA do with a 25-basis-point cut made at
the start of June.
UBS predicted the Fed would cut an additional
100 basis points, on top of an expected 50-basis-point July cut, which
would send the economy dangerously low to the ground but would avoid
recession.
However, eyes will be on the escalation of trade
conflicts, which would push global equities down by 20 per cent and hurt
US growth.
“As trade tensions escalate, growth and policy rates
are likely to decline more in the US than in Europe. Such a scenario is
typically negative for the USD, but growth differentials matter less for
the dollar when we fall below the 30th percentile of global growth,”
said UBS.
Over half of the impact would be on “innocent
bystanders”, said the report, as spillovers from lower growth in US and
China impacts the rest of the world.
UBS is currently watching a
few world events that will inform its forecast, including recent public
hearings on China tariffs and the Fed meeting in July.
It also
looked forward to the G20 summit where it expected President Trump and
President Xi will have made enough progress to forestall tariff
escalation and in fact will likely announce tariffs by July.
If
the trade situation escalates, UBS predicted the US growth and policy
rates will come down by more than those in Europe but would push global
growth into the bottom quartile, which would see the USD top out against
G10 currencies in the middle of 2020.
Overall, UBS did not
predict too much change for Australia, with both US-China tariffs or
Mexico tariffs not having too great an impact on the base case.
It
did note that, previously, Australia had been buffered from external
shocks due to substantial fiscal and monetary policy flexibility.
However,
the low cash rate and a post-GFC low for the AUD may see this buffer
weakened and the external shocks having more of an impact.
Slater and Gordon has today filed a class action against AMP on behalf of over two million Australians, via InverstorDaily.
The
class action is the second to be filed by Slater and Gordon as part of
its Get Your Super Back campaign that kicked off following the Royal
Commission.
The first class action launched by Slater and Gordon as part of their Get Your Super Back campaign was against Colonial First State.
The
case alleges that through arrangements with related parties, trustees
AMP Super and NM Super paid too much to related AMP entities for
administration services.
The case also alleges that they failed to secure an appropriate return on cash-only investment options.
Senior
Associate Nathan Rapoport at Slater and Gordon said super members
trusted that AMP would act in their best interests but instead were
charged exorbitant fees.
“Both AMP Super and NM Super, as
trustees of the funds, should have taken steps to secure the best deal
for members on a commercial arms-length basis,” said Mr Rapoport.
Mr
Rapoport said that the Royal Commission head evidence of a group of AMP
cash option members who received negative returns due to un-competitive
interest rates and excessive fees and not even the trustee was aware of
it.
“These customers would have been better off keeping their retirement savings under their bed,” Mr Rapoport said.
An AMP spokesperson said that the group acknowledged the class action proceeds and would vigorously defend the proceedings.
“The
action relates to fees charged to members, and the low interest rate
received and fees charged on cash-only fund options. The proceedings
will be vigorously defended.
“AMP and the trustees of its
superannuation funds are firmly committed to acting in the best
interests of their superannuation members and acting in accordance with
legal and regulatory obligations. We encourage any customers who have
concerns to contact AMP directly or their financial adviser,” an AMP
spokesperson said.
This is the latest class action to hit AMP after Maurice Blackburn Lawyers also
filed a class action against AMP seeking compensation for shareholders
alleging it breached the Corporations Act for failed to disclose its
practice of charging fees for no service and for its interactions with
ASIC.
Slater and Gordon were one of the five law firms to compete for the shareholder class action but Maurice Blackburn eventually won the right to continue on the case due to its funding model.
With the super industry set to undergo a range of changes in the coming days, the new assistant minister for financial services has hinted that further changes are still to come., via InvestorDaily.
As
of 1 July, the government’s Protecting Your Superannuation laws will
see automatic life insurance cover be turned off for members whose
accounts have been inactive for over 16 months.
Other changes
coming include closing inactive super accounts with a balance of less
than $6,000, which will be transferred to the ATO before finding its way
to members’ active accounts.
Fees will also be capped on
low-balance accounts, and exit fees will be removed along with a variety
of changes aimed at helping older Australians.
However,
Assistant Minister for Superannuation and Financial Services Jane Hume
has now suggested that 2021 will see the industry change yet again.
2021
is currently the year that the compulsory superannuation guarantee will
rise from 9.5 per cent to 10 per cent and is now potentially the
deadline for a system overhaul.
The superannuation guarantee was a
hot topic during the election campaign as Labor had vowed to increase
the guarantee to 12 per cent by 2025, while other groups called for the
planned guarantee raises to be cut.
Chief policy officer for the
Association of Superannuation Funds of Australia Glen McRea told
Investor Daily that the overwhelming majority of Australians support the
increase of the guarantee.
“Recent polling for ASFA by CoreData
indicates that an overwhelming majority of Australians support the
current compulsory superannuation system and want to see the
Superannuation Guarantee (SG) increased to 12 per cent of wages. It
found around 80 per cent of respondents across a range of demographics
either support or strongly support the increase,” he said.
Ms
Hume’s plans for super do not touch upon the guarantee, rather the
senator has told the industry that 2021 is the deadline to have the
overhaul in order.
“If a system is compulsory and it quarantines
nearly $1 in every $10 that you earn for up to 40 years, it is
imperative that the government make that system as efficient as
possible,” she told the Sydney Morning Herald.
Ms Hume plans to
reintroduce super legislation that would make all insurance opt-in for
those aged under 25 as well as implementing further recommendations of
the Productivity Commission’s review.
The $2.8 trillion super
industry is something Australia should be proud of, said Ms Hume, but
there were inefficiencies that needed to be ironed out.
Options
on the table included the default best-in-show list that has been
criticised by the industry and spring cleaning of underperforming
funds.
Mr McRea said the ASFA supported the initiatives by the
government to improve outcomes and would continue to do so where
appropriate.
“ASFA supports recent initiatives
to increase efficiency and improve outcomes for members – including
significant investment in technology, reducing rollover and transaction
processing times, and continuing to reduce the incidence of multiple
accounts,” he said.
The best-in-show was a suggestion from the
Productivity Commission which doubled down on its call for a top 10 list
earlier this year.
“This new approach will support member
engagement by ‘nudging’ members towards good products without forcing
them to pick one. Members will retain the option to choose from the
wider set of MySuper and choice products (or establish their own SMSF),
and elevated ‘outcomes tests’ will help to weed out persistently
underperforming products from the system,” the report read.
However,
Dr Martin Fahy from the ASFA at the time said he was disappointed in
the suggested as it risked creating an oligopoly in default
superannuation.
The suggestion was also not supported by Labor
with then shadow treasurer Chris Bowen expressing concerns that the list
may have unintended consequences.
An executive board member of APRA has told delegates that failing to take action on climate change now will lead to much higher economic costs in the long term, via InvestorDaily.
Executive
board member Geoff Summerhayes spoke to the International Insurance
Society Global Insurance Forum in Singapore and told delegates that
short-term pains were needed for long-term gains.
“The level of
economic structural change needed to prepare for the transition to the
low-carbon economy cannot be undertaken without a cost,” he said.
“But
it’s also true that failing to act carries its own price tag due to
such factors as extreme weather, more frequent droughts and higher sea
levels.”
Mr Summerhayes said that Australia had its share of the
climate change debate, with one side calling for action and the other
viewing climate change action as expensive.
“The
risk is global, yet the costs of action may not fall evenly on a
national basis. And second, the benefits will accrue in the future, but
many of the costs of change must be borne now. For the Australian
community, this remains a highly contentious set of issues,” he said.
Talking
to experts in risk management, Mr Summerhayes called on the insurance
industry to play a leadership role in bringing forward better data for
what the costs of climate action are.
“By developing more
sophisticated tools and models, and especially through enhanced
disclosure of climate-related financial risks, insurers can help
business and community leaders make decisions in the best interests of
both environmental and economic sustainability,” he said.
APRA
raised the issue in 2017 of the financial risks of climate change and
since then has been endorsed by the RBA and ASIC as well.
“When a
central bank, a prudential regulator and a conduct regulator, with
barely a hipster beard or hemp shirt between them, start warning that
climate change is a financial risk, it’s clear that position is now
orthodox economic thinking,” Mr Summerhayes said.
How best to act
remains a challenge, Mr Summerhayes admitted, and people were still
debating who should carry the burden and whether the benefits were worth
the costs.
“Government spending decisions may need to be
reprioritised, and not every member of society will be able to bear
these short-term costs equally comfortably,” he said.
However, what many forgot is that economic change also presents economic opportunities, the board member added.
“Forward-thinking
businesses have for years been seeking to get ahead of the low-carbon
curve by developing new products, expanding into untapped markets or
investing in green finance opportunities,” he said.
Ultimately, it was a fight between short-term impact or long-term damage, Mr Summerhayes said.
“Controlled
but aggressive change with a major short-term impact but lower
long-term economic cost? Or uncontrolled change, limited short-term
impact and much greater long-term economic damage?
“When put like
that, it seems such a straight-forward decision, but in reality,
businesses around the world are struggling to find the appropriate
balance.”
Climate risk was ultimately an environmental and
economic problem, and Mr Summerhayes said framing it as a cost-of-living
problem presented a false dichotomy.
“That approach risks
deceiving investors or consumers into believing there is no economic
downside to acting slowly or not at all. In reality, we pay something
now or we pay a lot more later. Either way, there is a cost,” Mr
Summerhayes said.
Ultimately, better data could help everyone to
better understand the physical risk trade-off and the reality that there
was no avoiding the costs of adjusting to a low-carbon future.
“Taking
strong, effective action now to promote an early, orderly economic
transition is essential to minimising those costs and optimising the
benefits. Those unwilling to buy into the need to do so will find they
pay a far greater price in the long run,” he said.
The Swiss bank has revealed plans to launch a comprehensive strategic wealth management partnership in Japan, via InvestorDaily.
UBS
and Sumitomo Mitsui Trust Holdings Inc. (SuMi Trust Holdings) have
agreed to establish a joint venture, 51 percent owned by UBS, that will
offer products, investment advice and services beyond what either UBS
Global Wealth Management or SuMi Trust Holdings is currently able to
deliver on its own.
The JV will open UBS’s current wealth
management customer base to a full range of Japanese real estate and
trust services, while SuMi Trust Holdings’ clients – one of the largest
pools of high-net-worth (HNW) and ultra-high-net-worth (UHNW)
individuals in Japan – will be able to access UBS’s wealth management
services, including securities trading, research and advisory
capabilities.
“No wealth management firm today provides this range
of offerings to Japanese clients under a single roof. UBS expects the
new joint venture to fill this gap by offering expanded products and
services to clients from both franchises,” UBS said in a statement.
“This
is the Japanese market’s first-ever wealth management partnership
developed between an international financial group and a Japanese trust
bank. Subject to receiving all necessary regulatory approvals, the two
companies plan to begin offering each other’s products and services to
their respective current and future clients from the end of 2019. Also
subject to approvals, these activities will ultimately be incorporated
into a new co-branded joint venture company by early 2021.”
UBS Group CEO Sergio P. Ermotti said the Swiss banking giant has over 50 years of history in Japan.
“This
landmark transaction with a top-level local partner will ideally
complement our service and product offering to the benefit of clients,”
he said. “The joint venture is a blueprint for how complementary
partnerships can unlock value for clients as well as shareholders.”
Zenji
Nakamura, UBS’s Japan country head, said the transaction is a boost for
the group’s overall business in Japan, bringing reputational benefits
to its investment banking and asset management units, which fall outside
the alliance.
“It is a new milestone that sends a clear message of long-term commitment to the Japanese market.”
UBS
will contribute all of its current wealth management business in Japan
to the new company, while SuMi Trust Holdings will extend its trust
banking expertise and refer relevant clients to the new joint venture.
Sumitomo
Mitsui Trust Holdings is Japan’s largest trust banking group, with
Sumitomo Mitsui Trust Bank Limited serving as its core business. It
offers a range of services, including banking, real estate, asset and
wealth advisory to individuals and corporate clients. As of end March
2018, it held 285 trillion yen in assets under custody – Japan’s largest
such pool – and a significant portion of those assets come from HNW and
UHNW clients.
UBS boasts over US$2.4 trillion in assets under management. It operates from locations in Tokyo, Osaka and Nagoya.
The two companies have agreed not to disclose the financial details of the transaction.
After successfully leading Westpac’s consumer bank, BOQ’s new boss George Frazis has landed a big job at a much smaller bank with a shrinking mortgage book, via InvestorDaily.
In
April, Bank of Queensland reported reporting negative mortgage growth
of $248 million, down from positive growth of $11 million in 1H18, with
its portfolio dropping to $24.7 billion.
The fall was driven by a
$717 million contraction in settlements through BOQ’s retail bank,
offset by a $469 million rise in home loan volumes through its
subsidiary, Virgin Money Home Loans.
The regional lender is well
aware of the challenges within its retail bank, which is effectively
franchised with branches being run by ‘owner-managers’. Given the
negative press generated by the royal commission, attracting new owner
managers has been difficult for BOQ.
Prior to the appointment of
George Frazis as CEO on 6 June, interim chief executive Anthony Rose
delivered an 8 per cent drop in cash earnings in the first half of
FY19.
“Across
the industry, as you are well aware, there have been significant
changes in the banking landscape which has created revenue headwinds for
the sector. In addition, the outcome from the royal commission is
lifting expectations of the regulators. Adjusting to the new regulatory
environment will come with a higher cost profile, absent any mitigating
actions which we are of course exploring,” Mr Rose said in April.
“BOQ
also has challenges that are specific to our business, particularly in
the retail bank. Our digital customer offering, lending processes and
the inability to attract new owner-managers with the overlay of
regulatory uncertainty, has hampered customer acquisition and returns.”
Mr
Rose, BOQ’s chief operating officer, will remain as interim CEO until
Mr Frazis takes over in September. Rose took charge following the
resignation of John Sutton in December 2018.
Morningstar analyst
David Ellis praised the appointment of Mr Frazis, an experienced banker
with 17 years in the industry, most recently as CEO of Westpac’s
consumer bank and CEO at St George Bank.
“While Frazis has strong
credentials and deeply understands the dynamics of Australia’s consumer
banking industry, he will be taking control of a regional player with a
small geographic distribution footprint, higher funding and operational
costs, a lower credit rating and tougher regulatory capital burden,” Mr
Ellis said.
The Morningstar analyst believes the challenge for
Mr Frazis is to assume a bigger role in a smaller organisation that
lacks market share, brand awareness, distribution capabilities and
funding advantages that major banks enjoy.
“Bank of Queensland’s
lending growth has been subdued for several years,” Mr Ellis said.
“Based on APRA banking statistics for April 2019, the bank’s 12-month
growth in home loans sit at just 0.3 per cent in April, compared to 1.7
per cent a year ago and 11.8 per cent three years prior.”
Bank system home loan growth is 3.3 per cent for the year to April 2019.
With
the RBA cutting rates this month, BOQ has lowered its fixed rates in an
effort to remain competitive in a mortgage market dominated by the big
four. However, with more cash rate cuts expected, Morningstar is
concerned whether BOQ can sustain its course of passing on the
reductions.
“The bank lacks access to lower-cost funding options
and has a much lower return on equity than the major banks,” Mr Ellis
said.
Under Mr Frazis’ leadership, Westpac’s consumer bank
attracted more than a million new customers in the past four years.
Digital channels now account for a third of sales.
“Frazis will have to do the same at Bank of Queensland,” Mr Ellis said
Maurice Blackburn Lawyers has filed the first class action against AMP, alleging that the bank eroded more than an estimated two million superannuation accounts with ‘unreasonable fees’, via InvestorDaily.
The action is seeking compensation for the bank’s super fund members. Maurice Blackburn has opened an online portal where members can sign up to claim fees dating back to 30 May 2013.
Material
tendered during the royal commission conveyed that AMP’s super funds
were charging uncompetitive administration fees, with high costs
exceeding returns and causing investment losses in some cases.
Maurice
Blackburn’s action has claimed that AMP trustees failed to monitor,
compare, negotiate or seek reductions of hefty fees being pocketed by
the group’s companies, despite their duty to act in the best interest of
members.
“It’s
important that inquiries and regulators uncover mass wrongdoing of this
nature, but that doesn’t give people back their hard-earned
superannuation funds, which they need for their retirement,” Brooke
Dellavedova, principal lawyer, Maurice Blackburn said.
“We estimate that over two million accounts have been impacted by AMP’s alleged misconduct.
“This
class action asserts that AMP trustees breached statutory and general
law obligations, essentially paying itself handsome fees from members’
funds. The case we are running will hold AMP to account for that.”
AMP said the proceeding will be “vigorously defended” in a statement, noting that it had cut product fees in the last year.
“In
2018, we cut fees on our flagship MySuper products, benefiting
approximately 600,000 existing customers as well as new customers,
improving member outcomes. In 2019, we also cut fees to MyNorth,” AMP
said.
“AMP and the trustees of its superannuation funds are firmly
committed to acting in the best interests of their superannuation
members and acting in accordance with legal and regulatory obligations.
We encourage any customers who have concerns to contact AMP directly or
their financial adviser.”
Litigation funder Harbour is funding the class action, which has been filed in the Federal Court in Melbourne.
“Importantly,
the matter will proceed in a way that means no one has to dip into
their own pockets to fund the litigation,” Ms Dellavedova said.
“AMP
account holders can band together to recover compensation, in
circumstances where most people would not bring a case on their own.
“If
you have had a superannuation account with AMP at any time since 30 May
2013, then you can sign up for this action to recover some of your lost
funds, including compound growth amounts you missed out on.”
