Trending Financial News 22 November

Scott Morrison tells Westpac to clean up

The prime minister Scott Morrison has told the Westpac board to consider the future of chief executive Brian Hartzer. Mr Morrison said most Australians would be horrified to think one of their major banks was implicated in assisting criminals involved in money laundering and child exploitation rings in Asia.

“They should be taking this very seriously, reflecting on it very deeply and taking the appropriate decisions for the protection of people’s interests in Australia,” Mr Morrison told ABC Radio.

Financial transaction regulator AUSTRAC alleges WESTPAC failed to report or properly monitor 23 million suspicious international money transfers.

“These are some very disturbing transactions involving despicable behaviour,” said Mr Morrison.

What did Westpac do wrong?

AUSTRAC, Australia’s anti money-laundering and terrorism financing regulator, has applied to the Federal Court for civil penalty orders against Westpac over “systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act”

AUSTRAC alleges Westpac contravened the Act more than 23 million times, meaning it failed to report more than 23 million suspicious transactions.

AUSTRAC CEO Nicole Rose said Westpac failed to report international transactions properly for five years and has failed to keep records.

“These laws are in place to protect Australia’s financial system,” said Nicole Rose, “Systemic non-compliance leaves our financial system open to being exploited by criminals.”

Did Westpac help criminal gangs?

AUSTRAC alleges Westpac breached the Anti-Money Laundering and Counter-Terrorism Financing Act by failing to report more than 23 million international money transfers.

AUSTRAC says that Westpac did not “carry out appropriate customer due diligence on transactions to the Philippines and South East Asia that have known financial indicators relating to potential child exploitation risks.”

AUSTRAC also alleges that Westpac did not have systems in place to detect “known child exploitation typologies.” 

RBA closes in on zero

Interest rates could go lower. Markets have priced in a 31 per cent chance of a rate cut of 0.25 percentage points to 0.50 per cent from the Reserve Bank at its next board meeting.

The RBA was close to announcing a rate cut in November but decided to wait and see more affects of the previous three rate cuts.

The RBA said rate cuts were supporting house prices but having a negative impact on savers and could also undermine public confidence in the economy. Read more about the outlook for interest rates at InfoChoice.

At last – a basic bank account for battlers

Farmers affected by natural disasters and Centrelink beneficiaries will at last have guaranteed access for fee-free banking and transactions without the danger of unwanted interest-bearing overdrafts.

The 23 member banks of the Australian Bankers Association have been granted approval to amend their banking code of conduct to guarantee basic fee-free banking for concession card holders and farmers in crisis.

The Code now:

•    prohibit overdrawn fees, dishonour fees and informal overdrafts on low or no fee basic accounts, unless agreed by the customer;

•    prevent default interest, fees being charged on agricultural loans in areas affected by natural disasters,

•    provide a basic everyday transaction bank account with no minimum deposits, free direct debits, a debit card and free unlimited domestic transactions.

•    Identify customers who may be eligible for basic accounts (concession card holders, farmers).

Why is there a new banking code of conduct?

The big banks and their lobby group, the Australian Bankers Association, have been widely promoting their new banking code of conduct for 23 of the biggest financial institutions in Australia.

The new code follows revelations revealed by the Hayne Royal Commission and extensive consultations with consumer groups and regulators. The new code promises:

Greater protection for customers

Basic, low or no-fee bank accounts

Stronger enforcement and compliance

Easier credit card management

Easier for Small Business

Who wrote the banking code of conduct?

The banking code of conduct is a document of the Australian Bankers Association that requires its 23 member banks to adhere to guidelines and standards of conduct to protect consumers.

The new code was submitted to regulators in early-2019 for approval and comment and was shared with consumer lobby groups in mid-2019.

Both the regulators, ASIC and ACCC, and the consumer groups, CHOICE, Consumer Action Law Centre and the Community Financial Legal Service have demanded changes to the code and the banks have agreed.

First home buyers are getting older

Younger people are less likely to commit to buying a home than they were in the past according to new research from the ARC Centre of Population Ageing Research (CEPAR).

Over the last 50 years the median age of first home buyers has increased by six years, from 27 to 33.

The report authors say home ownership is an important part of our community social welfare system.

Professor John Piggott said home ownership is a “critical pillar in wellbeing and social support through the life course”.

Read more about the property market outlook at InfoChoice.

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