THE House of Representatives Standing Committee on Economics will hold a public hearing with the Governor of the Reserve Bank of Australia (RBA), Dr Philip Lowe, in Canberra from 9.30am to 12:30pm on Friday, 17 August 2018.

Since the previous hearing with the RBA in February 2018, monetary policy has remained accommodative with a cash rate of 1.50 percent, following the RBA’s recent decision to leave interest rates unchanged.

Commenting on the decision to keep rates on hold, the RBA Governor said low interest rates are "continuing to support the Australian economy’ and that ‘further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual".

The Governor expects growth in the Australian economy to average just above 3 percent in 2018 and 2019, which should further reduce spare capacity in labour markets.

In its August Statement on Monetary Policy, the RBA noted softer than expected inflationary pressures in the Australian economy in the near term, and said it did not expect underlying inflation to reach the middle of its 2-3 percent target band until the end of its forecast period in 2020.

The Chair of the House Economics Committee, Sarah Henderson, said, "The committee will examine these issues in more detail and will ask the RBA if it remains confident that current monetary policy settings will encourage growth and inflation consistent with the target for coming years."

Public hearing details: 9.30am to 12.30pm, Friday, 17 August 2018, Main Committee Room, Parliament House, Canberra

The hearing will be webcast at www.aph.gov.au/live

FINTECH AUSTRALIA is pleased to announce that the Victorian Government will increase its support for the startup and FinTech communities by signing on to be the major sponsor of Intersekt for both 2018 and 2019, as tickets for this year’s event go on sale today.

FinTech Australia Chief Executive Officer, Brad Kitschke said, “The Victorian Government and Minister Dalidakis continue to demonstrate their leadership and support for startups and the FinTech ecosystem, through the sponsorship of this important conference for the next two years.

"Intersekt is a must-attend for anyone involved in FinTech and we are extremely excited that our partnership with Minister Dalidakis and the Andrew’s Government will Melbourne the home of Intersekt for the next two years.

"Intersekt is great value for money. The early bird prices for the 3-day conference are discounted heavily as we want as many startups as possible to attend. FinTech Australia is a not-for-profit industry body, and we reinvest in our members and the ecosystem.

We are doing our best to make 2018 better than ever, with three days of jam-packed value from the 29th to 31st of October,” Mr Kitschke said.

Victorian Government Minister for Trade and Investment, Innovation and the Digital Economy Philip Dalidakis said he looked forward to opening the conference and to the ongoing partnership with FinTech Australia.

“Attracting delegates from the Asia Pacific region and beyond, Intersekt brings together the most creative minds in the Fintech sector," Mr Dalidakis said.

"Innovations in financial technology are revolutionising the way we do business and are crucial to Victoria’s future economy and jobs.

"I look forward to joining FinTech Australia in welcoming all delegates to this not to be missed conference in October.“  Minister Dalidakis said.

FinTech Australia was also pleased to announce that LaTrobe University will be a Gold Sponsor of the event and its exclusive education partner. 

CEO Brad Kitschke praised the University's leadership in FinTech education and welcomed their support for Intersekt.

This year’s conference will feature an official opening by Minister Dalidakis, the launch of the EY FinTech Census Report, the launch of FinTech Australia’s open banking campaign, an investor matching deal day, bringing together startups and investors, and a graduate match powered byCSIRO Data61’s Ribit.net and LatTrobe University for tertiary students looking for roles and FinTechs looking for potential employees.  

Tickets can be purchased and delegate registrations lodged at www.intersektfestival.com.

Early bird prices are available all throughout August.

About FinTech Australia

FinTech Australia Ltd. is the peak body for the Australian financial services, technology and innovation - Fintech industry.  We were founded by Startups, and are a startup ourselves. We work with founders, startups, scaleups and the Fintech ecosystem. We represent our members and advocate for outcomes that facilitate the growth of the Fintech ecosystem with the goal of making Australia a leading Fintech market. For more information visit www.fintechaustralia.org.au

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FEDERAL Treasurer Scott Morrison said the Turnbull Government was  continuing to protect the integrity of Australia's corporate tax system by tightening the rules on stapled structures.

"These entities have been used by foreigners to reduce the tax paid on the income they earn from their Australian investments," Mr Morrison said.

"Today I released exposure draft legislation dealing with additional integrity rules that will apply to stapled entities that access the infrastructure concession and/or transitional arrangements. This will give effect to the policy announced on 28 June 2018."

The conditions include:

• The extension of existing integrity rules that apply to Managed Investment Trusts (MITs) to ensure that all staples eligible for the transition rules or the infrastructure concession are required to comply with the existing non arm’s length income rule; and
• The introduction of statutory caps on the amount of cross-staple rent that is able to access the concessional 15 per cent rate of withholding tax (available under the MIT regime) for economic infrastructure projects during the transition or concession period.

"The staples measures demonstrate the Turnbull Government’s continued action to protect the integrity of Australia’s corporate tax system and to ensure that foreign investors pay their fair share of tax," Mr Morrison said.

The exposure draft legislation and explanatory materials are available on the Treasury website.  The Treasurer said the Government encouraged all interested parties to make a submission. Submissions close on 14 August 2018. 

www.treasury.gov.au

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AMP, ANZ, CBA, NAB and Westpac have now paid or offered customers $222.3 million in refunds and interest for failing to provide advice to customers while charging them ongoing advice fees.

This represents a further $6.4m in payments and offers from these institutions since the last ASIC media release (17-438MR) on the fees for no service (FFNS) project, which provided compensation figures as at 31 October 2017.

In addition, ASIC is overseeing FFNS remediation programs by other Australian financial services (AFS) licensees that have identified potential FFNS failings, including Bendigo Financial Planning Ltd, Police Financial Services Ltd (trading as BankVic), State Super Financial Services Australia Limited (trading as StatePlus), and Yellow Brick Road Wealth Management Pty Ltd. The total amount now paid or offered to customers across both groups of licensees is $259.6m.

ASIC is also aware that five AFS licensees or institutions have provisioned for future remediation payments, with four of these to date providing to ASIC amounts for future remediation (see below in notes). If all of these provisions are paid in full, FFNS remediation may exceed $850m.

The table provides compensation payments and estimates reported to ASIC as at 30 June 2018. Some institutions' total estimates have changed since ASIC’s previous media release as they have further investigated the compensation required and, in some cases, identified additional failures needing remediation.

Source: Data reported by the AFS licensees to ASIC as at 30 June 2018.

Table notes

(1)  This includes amounts paid to customers as well as amounts paid to unclaimed monies and charities (for example, where the licensee was unable to contact the customer).

(2)  Some estimates exclude interest. Estimates may change, as each entity further investigates the failures. Some entities do not yet have estimates of future remediation, but have provisioned for (or are in the process of provisioning for) FFNS remediation in their financial statements. The provisions may include amounts already paid.

(3) In addition, on 27 July 2018, AMP announced that it has provisioned in relation to potential remediation in relation to ASIC report 499. AMP has advised ASIC that its pre-tax estimate for FFNS remediation is $240m, or $360m including interest. This estimate covers all the advice licensees within the AMP group (both the salaried advisers and the aligned dealer groups) and covers remediation for the period up to 31 December 2017.

(4) ANZ has advised ASIC that it has provisioned for FFNS remediation, but has not yet provided details of that provision to ASIC.

(5) NAB has provisioned a further $65m across its financial advice licensees relating to FFNS remediation and project costs.

(6) Though Westpac has not provided ASIC with an estimate for future remediation, it informed ASIC that it has provisioned approximately $24m relating to FFNS remediation for the 2017-18 financial year for Westpac Banking Corporation, of which 3.24m had been paid as at 30 June 2018. This provision does not cover future periods, or other Westpac owned AFS licensees.

(7) StatePlus has not provided ASIC with an estimate of future FFNS remediation. However, it has provisioned a further $53m relating to FFNS remediation, which it expects will cover both further FFNS customer remediation and remediation project expenses.

(8) The table shows compensation paid by NAB's superannuation trustee, NULIS Nominees (Australia) Limited (NULIS), for two breaches involving failures in relation to the provision of general advice services to superannuation members who paid general advice fees. (Other fees referred to in this release relate to personal advice). This remediation was completed in 2017. As announced by ASIC on 2 February 2017 ASIC imposed additional licence conditions on NULIS following this and another breach: ASIC MR 17-022. The failure was by MLC Nominees Pty Ltd and MLC Limited. Whilst on 1 July 2016 the superannuation assets governed by MLC Nominees were transferred by successor fund transfer to NULIS, and on 3 October 2016 NAB divested 80% of its shareholding in the MLC Limited Life Insurance business, accountability for this remediation activity (including compensation) remains within the NAB Group.

(9) On 26 July 2018 NULIS announced a further remediation program relating to general advice fees. This amount excludes interest.

How to remediate FFNS failures

ASIC has published an Information Sheet 232 (INFO 232) that sets out ASIC’s expectations of AFS licensees remediating FFNS breaches. 

• Read the information sheet

Next steps

ASIC will continue to monitor the above FFNS licensees compensation programs.

In addition, ASIC will continue to supervise the further reviews for those entities subject to the FFNS project, to determine whether any additional instances of fees being charged without advice being provided are identified. ASIC expects to publish a media release on their further reviews in the coming months.

Background

In October 2016, ASIC released Report 499 Financial advice: fees for no service (REP 499). The report described systemic failures of the advice divisions of the largest banks and AMP, as well as some of their product issuers, to ensure that ongoing advice services were provided to customers who paid fees to receive these services, the failure of advisers to provide such services, and the failure of product issuers to switch off advice fees of customers who did not have a financial adviser.

At the time of the publication of the report compensation arising from the fee-for-service failures reported to ASIC was approximately $23.7 million, which had been paid, or agreed to be paid, to more than 27,000 customers.

ASIC has published updates to the above remediation in May 2017 (17-145MR) and in December 2017 (17-438MR).

MoneySmart

Customers who are paying ongoing advice fees for services they do not need can ask for those fees to be switched off. Customers who have paid fees for services they did not receive may be entitled to refunds and compensation, and should lodge a complaint through the bank or AFS licensee's internal dispute resolution system or the Financial Ombudsman Service.

ASIC's MoneySmart website explains how customers can check they are getting the financial advice they paid for. It also has a financial advice toolkit to help customers navigate the financial advice process and understand what they should expect from an adviser, and useful information about how to make a complaint.

www.asic.gov.au

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