Trending Financial News 11 September 2019
ASIC appeals “Wagyu and Shiraz” ruling
The corporate watchdog, the Australian Securities and Investments Commission, has lodged an appeal against a Federal Court decision in August that rejected its claims that Westpac failed to properly assess loan applications. ASIC alleged Westpac breached its responsible lending obligations by relying on a standard household expenditure benchmark to assess borrowers’ living costs. Westpac routinely ignored the actual expenses of individual loan applicants.
Westpac and ASIC agreed to settle the dispute last year but Justice Nye Perram of the Federal Court said that a lender “may do what it wants in the assessment process”. Justice Perram famously referred to borrowers giving up Wagyu beef and Shiraz wine in order to afford loan repayments.
ASIC insists Westpac was not a responsible lender
The corporate watchdog, the Australian Securities and Investments Commission, has lodged an appeal to the full Federal Court to clarify the responsible lending obligations of banks and home lenders.
ASIC commissioner Sean Hughes said: “The Credit Act imposes a number of legal obligations on credit providers, including the need to make reasonable inquiries about a borrower’s financial circumstances, verifying information obtained from borrowers and making an assessment of whether a loan is unsuitable for the borrower.”
“ASIC considers that the Federal Court’s decision creates uncertainty as to what is required for a lender to comply with its assessment obligation,” said Mr Hughes.
Cashless Welfare Card rolling out nationally
Prime Minister Scott Morrison has announced that the Centrelink Cashless Debit Card program is being rolled out to 22,500 people in communities in the Northern Territory and Cape York. Mr Morrison says lower youth unemployment numbers show the card is working in some of the trial sites.
The results from the trials so far meant the card is “commending itself for wider application” said Scott Morrison.
Mr Morrison said any further roll-out of the CDC program would target young people under 30 and would require broad support from communities where it is introduced.
Will Centrelink recipients be drug tested?
The government has announced a drug testing pilot program for people claiming Centrelink benefits.
Ben Morton, the assistant minister to the Prime Minister wrote in Nine Fairfax newspapers yesterday that Centrelink’s Cashless Debit Card could be issued to people with drug addiction problems.
Explaining the government’s new drug testing scheme for Centrelink recipients, Mr Morton said:
“When you are detected with drugs in your system, you won’t lose your payments.
“Jobseekers who test positive will have their payments placed on income management. There will be no cut in income, just assistance to spend their funds wisely.”
ING doubles fees on business loans
ING Australia has introduced big new upfront fees for business loans.
From Monday 6 September 2019 new commercial borrowers will be charged an upfront “commitment fee” of $2000 (up from $1,000) when they apply for loans of up to $1 million.
Loans over $1 million will pay 0.2 per cent of the principal as a fee which applicants are required to pay before their loan applications are assessed.
Are business loan fees making a big comeback?
ING has doubled the upfront fee on new business loan applications and other banks and lenders are expected to follow suit. However the move to raise business credit fees could raise concerns in Canberra.
The Australian Bureau of Statistics reported that private investment in the Australian economy fell by 1.6 per cent in the June quarter.
“Our focus now needs to be on how we can more effectively encourage business investment,” said Treasurer Josh Frydenberg in August, “It’s a discussion which I am continuing to progress with the business community.”
Another new Aussie bank opens for business
New online-only bank, 86 400, soft launched more than two weeks ago and officially launched yesterday.
Last night the 86 400 app was ranked fifth for banking apps in Apple’s App Store behind Up Bank (owned by Bendigo bank) Commbank, Westpac and ANZ.
The 86 400 banking app anticipates upcoming bills (such as electricity), helping users to manage their cash.
86 400 said research showed 22 per cent of bank customers pay late payment fees on bills every month (on average).
“Australians are losing $4.01 per month in late payment fees for bills,”