澳大利亞金融業(yè)：面惡心善

1、5 February 2019AustraliaEQUITIESKey recommendations impacting banksSource: RC, Macquarie Research, February 2019InsideSummary of banking recommendation HYPERLINK l bookmark10 o Current Document impacts2 HYPERLINK l bookmark77 o Current Document Responsible Lending3 HYPERLINK l bookmark85 o Current D

2、ocument Mortgage Brokers5 HYPERLINK l bookmark87 o Current Document Agricultural Lending7Remuneration, Governance, and Culture 8 HYPERLINK l bookmark22 o Current Document Wealth Management12 HYPERLINK l bookmark57 o Current Document General Insurance16AnalystsMacquarie Securities (Australia) Limited

3、Victor German +61 2 8232 6089Josh Freiman +61 2 8232 3882Patrick Hsiao +61 2 8232 2845Anita Stanley, CFA +61 2 8232 9869Brendan Carrig +61 2 8237 6043Andrew Buncombe, CFA +61 2 8232 0629Australian FinancialsBark worse than biteKey pointsWe believe the majority of recommendations are marginally bette

4、r than the current conservative markets expectations.We see the removal of trailing commissions for brokers as a near-term positive outcome for the major banks.We see near-term upside to share prices in Banks and Wealth Managers, as valuation discounts relating to adverse outcomes partially unwind.E

5、ventFollowing a tumultuous year for the financial services industry, the recommendations from the Commissioner were arguably not as intrusive as currently implied by stock valuations. Except for the mortgage broking industry, we believe the majority of recommendations are marginally better than the

6、conservative markets expectations, and we expect valuation discounts related to adverse outcomes from the Royal Commission to partially unwind.ImpactResponsible lending - Given its importance for the sector and the broader economy, this was the key potential adverse risk. However, as we expected, th

7、e Commissioner provided a principles-based approach to improving the processes and procedures in meeting the responsible lending obligations. However, no recommendation to the amend the NCCP Act suggests that banks and the Regulators would have required time to implement responsible lending standard

8、s in a manner that would not be disruptive for the market. While we continue to expect credit growth to moderate from current levels, we believe the downside risk has been removed and see this as a positive outcome for the banks.Mortgage brokers - While it was increasingly clear that existing busine

9、ss models for mortgage brokers are likely to be challenged, the extent of the proposed changes appears to be more far-reaching than expected. We expect the removal of trailing commissions to be a net-positive for banks margins (3-4bps) and, in the near term, expect banks to be net beneficiaries of i

10、mproved flows. In the longer term, we expect the industry to find a new equilibrium and for banks gains to be ultimately competed away.Increased compliance burden and remuneration changes - We expect the recommendations to result in increased compliance costs and cost of doing business, higher remed

11、iation charges and potentially lower revenue in selected product areas. Furthermore, we believe that remuneration models will change to increasingly incorporate customer outcomes, which in the short term is likely to result in lower returns but in the long term is arguably positive for the sustainab

12、ility of the industry. While fundamentally this is negative for returns of financial service companies, we believe current valuation largely incorporates those risks.OutlookWe see near-term upside in Banks and Wealth Managers from their current levels. However, in the longer term, the challenging ea

13、rnings outlook is likely to limit the upside to share price recovery.Please refer to page 21 for important disclosures and analyst certification, or on our website .CultureFocus on mitigating misconductThe report requires financial services entities to regularly assess the entitys culture and govern

14、ance. Given the general nature of this recommendation we see a risk it is not properly carried out and becomes a fbox-ticking exercise. The second recommendation in relation to culture requires APRA, through its prudential standards and guidance, to build a supervisory culture that will mitigate the

15、 risk of misconduct.Two recommendations on culture that focus on mitigating misconductThe report notes the difficulty in changing culture at an organisation. It highlights the APRA Prudential review into CBA and encourages further prudential work in this area. The two recommendations are highlighted

16、 below.Changing culture and governance (Recommendation 5.6). All financial services entities should, as often as reasonably possible, take proper steps to:n assess the entitys culture and its governance;= identify any problems with that culture and governance;= deal with those problems; and F= deter

17、mine whether the changes it has made have been effective.Supervision of culture and governance (Recommendation 5.7). In conducting its prudential supervision of APRA-regulated institutions and in revising its prudential standards and guidance, APRA should:= build a supervisory program focused on bui

18、lding culture that will mitigate the risk of misconduct;n use a risk-based approach to its reviews;= assess the cultural drivers of misconduct in entities; and= encourage entities to give proper attention to sound management of conduct risk and improving entity governance.There are also a number of

19、recommendations that seek to increase protections to consumers from misconduct. These include;= These focus on making some provisions of industry codes enforceable.= Banking code be changed to give improve access to banking (rec. 1.8)n Enactment of national scheme of farm debt mediation (rec. 1.1)=

20、Ongoing fee arrangements must be expressly renewed by the client each year (rec.2.1)= Prohibiting of hawking of super and insurance products (rec.4.1)n Cap on add-on insurance commissions (rec.4.4)= Deferred sales model be established for the sale of add-on insurance (rec.4.3)= Trustees impact in th

21、e way employers choose default superannuation funds (rec.3.6)Other recommendations related to culture include requiring AFSL holders to:=Take steps where they detect a financial advisor has engaged in misconduct (rec. 2.9).= Reference check and share information relating to termination of financial

22、advisors (rec. 27)n Report serious compliance concerns (rec. 2.8).Other changesBelow we highlight a number of other recommendations.There is a recommendation for an oversight body for ASIC and APRA as well as capability reviews of regulators every four years (rec.6.14)Extend jurisdiction of federal

23、courts for corporate criminal misconduct (currently heard at the state level, where there are long delays).Compensation scheme of last resort to be established by the government and managed by the Australian Financial Complaints Authority (AFCA), can award compensation going back 10 years, (rec.7.1)

24、. We believe that this scheme may increase over time and financial institutions are likely to be funders of the scheme.Ultimately, we expect the recommendations to result in increased compliance costs and cost of doing business and higher remediation charges. As we highlighted in our outlook report,

25、 Australian Banks - Clearinq with a chance of storms, our estimate of potential additional remediation charges is summarised below.Fig 10 Remediation Charges ForecastNote: CBA provided for $200m in 1Q19 for NewCo (aligned dealers) not yet reported. Dealer numbers as per ASIC Financial Adviser Regist

26、er Nov- 2018. Assumes Remediation to Adviser Ratio of 0.70, Remediation to Housing and Business Lending at 5bps and Remediation to Consumer Lending at 125bps.ANZCBANABWBCAMPIFLTotal Remediation to date7538054355496700Average advisers (last 5 years)11591580164711213017986Additional remediation estima

27、tesImplied Additional Salary3241610466203Implied Additional Aligned603509703347364Implied Banking Remediation0363302216Implied Additional Total Remediation92788811106281420567Source: Company data, Macquarie Research, February 2019Wealth Management(Brendan Carrig & Patrick Hsiao)Financial AdviceFees

28、for no serviceIn order to limit the likelihood of fees for no service to occur going forward, the Commissioner has recommended fee arrangements be reviewed annually by the client and cannot be deducted from a clients account without their written consent. Similar recommendations have been reflected

29、in the Superannuation section, with restrictions on deductions of advice fees from superannuation accounts. While this will result in less fee revenue for the industry, these fees are being remediated to clients and whilst difficult to quantify the impact will be partly reflected in current sector m

30、ultiples.Recommendation 2.1 Annual renewal and paymentThe law should be amended to provide that ongoing fee arrangements (whenever made):must be renewed annually by the client;must record in writing each year the services that the client will be entitled to receive and the total of the fees that are

31、 to be charged; andmay neither permit nor require payment of fees from any account held for or on behalf of the client except on the clients express written authority to the entity that conducts that account given at, or immediately after, the latest renewal of the ongoing fee arrangement.The Govern

32、ment agrees to require advisers to seek annual renewal, in writing, of ongoing fee arrangements; to require advisers to record, in writing, the services that will be provided and the associated fees; and mandate the clients express written authority for the payment of fees from any account held for

33、or on behalf of a client given at, or immediately after, the latest renewal of the ongoing fee arrangement. These requirements will apply for all clients.Inappropriate AdviceOne of the most anticipated recommendations was the removal of grandfathered commissions. IFL has previously disclosed to the

34、market that they anticipate the impact to their business would be immaterial. This is unlikely to be the case for AMP although based off publically available ifs difficult to quantify. Anecdotally we have heard that at around one third of advice revenues are at risk.In our view, the biggest positive

35、 for the sector relative to expectations is the continuation of the vertically integrated model. The Commissioner highlighted that Enforced separation of product and advice would be a very large step to take. It would be both costly and disruptive. I cannot say that the benefits of requiring separat

36、ion would outweigh the costs, and the Productivity Commission concluded that forced structural separation is not likely to prove an effective regulatory response to competition concerns in the financial system. However it was suggested that commencing later this year, the ACCC will undertake 5 yearl

37、y market studies on the effect of vertical and horizontal integration in the financial system.Recommendation 2.2 Disclosure of lack of independenceThe law should be amended to require that a financial adviser who would contravene section 923A of the Corporations Act by assuming or using any of the r

38、estricted words or expressions identified in section 923A(5) (including Independent5, ImpartiaP and unbiased5) must, before providing personal advice to a retail client, give to the client a written statement (in or to the effect of a form to be prescribed) explaining simply and concisely why the ad

39、viser is not independent, impartial and unbiased.The Government agrees to require advisers to provide a written statement to a retail client explaining why the adviser is not independent, impartial and unbiased before providing personal advice, unless the adviser is allowed to use those terms under

40、section 923A of the Corporations Act 2001 (Corporations Act).Recommendation 2.4 Grandfathered commissionsGrandfathering provisions for conflicted remuneration should be repealed as soon as is reasonably practicable.The Government agrees to end grandfathering of conflicted remuneration effective from

41、 1 January 2021. From 1 January 2021, payments of any previously grandfathered conflicted remuneration still in contracts will instead be required to be rebated to applicable clients where the applicable client can reasonably be identified. Where it is not practicable to rebate the benefit to an ind

42、ividual client because, for example, the grandfathered conflicted remuneration is volume-based so it is not able to be attributed to any individual client, the Government expects industry to pass these benefits through to clients indirectly (for example, by lowering product fees). To ensure that the

43、 benefits of industry renegotiating current arrangements to remove grandfathered conflicted remuneration ahead of 1 January 2021 flow through to clients, the Government will commission ASIC to monitor and report on the extent to which product issuers are acting to end the grandfathering of conflicte

44、d remuneration for the period 1 July 2019 to 1 January 2021 and are passing the benefits to clients, whether through direct rebates or otherwise.Professional DisciplineThe below recommendations will hold the advice industry to a higher standard going forward and will seek to build in the industry ag

45、ain. These recommendations will be an important part of the advice industry moving towards being considered a profession.Recommendation 2.7 Reference checking and information sharingAll AFSL holders should be required, as a condition of their licence, to give effect to reference checking and informa

46、tion-sharing protocols for financial advisers, to the same effect as now provided by the ABA in its Tinancial Advice Recruitment and Termination Reference Checking and Information Sharing ProtocoP.The Government agrees to mandate the reference checking and information-sharing protocol for financial

47、advisers for all Australian Financial Services Licence (AFSL) holders.Recommendation 2.8 Reporting compliance concernsAll AFSL holders should be required, as a condition of their licence, to report serious compliance concerns* about individual financial advisers to ASIC on a quarterly basis.The Gove

48、rnment agrees to mandate reporting of serious compliance concerns about individual financial advisers to ASIC on a quarterly basis. The Royal Commission has highlighted concerns around the current reporting of breach information to ASIC with firms failing to report significant breaches to ASIC in a

49、timely manner. The Government has also agreed, in its response to Ftecommendation 7.2, to strengthen the obligations to report breaches to ASIC.Recommendation 2.9 Misconduct by financial advisersAll AFSL holders should be required, as a condition of their licence, to take the following steps when th

50、ey detect that a financial adviser has engaged in misconduct in respect of financial advice given to a retail client (whether by giving inappropriate advice or otherwise): make whatever inquiries are reasonably necessary to determine the nature and full extent of the advisers misconduct; and where t

51、here is sufficient information to suggest that an adviser has engaged in misconduct, tell affected clients and remediate those clients promptlyThe Government agrees to require all AFSL holders to make whatever inquiries reasonably necessary to determine the nature and full extent of an advisers misc

52、onduct (when the licensee detects misconduct) and inform and remediate affected clients promptly. This recommendation will be reinforced by the Government announcement to provide ASIC with a new directions power as part of its response to the ASIC Enforcement Review.Recommendation 2.10 A new discipl

53、inary systemThe law should be amended to establish a new disciplinary system for financial advisers that: requires all financial advisers who provide personal financial advice to retail clients to be registered; provides for a single, central, disciplinary body; requires AFSL holders to report serio

54、us compliance concerns, to the disciplinary body; and allows clients and other stakeholders to report information about the conduct of financial advisers to the disciplinary body.The Government agrees to introduce a new disciplinary system for financial advisers.This disciplinary system for financia

55、l advisers will operate concurrently with the existing AFSL regime and ASIC will retain the powers it has under the current regulatory framework, including the power to commence investigations and undertake enforcement action.SuperannuationTrustees, obligations to membersIn what appears to be a dire

56、ct response to evidence given by IFL during Round 5 hearings, Trustees will no longer be permitted from to assume any obligation other than those arising from or in the course of its performance of the duties of a trustee. Given the nature of the conflicts of interest that arise here this was, in ou

57、r view, an unsurprising recommendation.What was less expected and could have a more material impact on revenues is the proposed restriction on deducting advice fees from superannuation accounts. Advice fee deductions from MySuper accounts will be prohibited, with written consent being required to de

58、duct advice fees from choice accounts.Recommendation 3.1 No other role or officeThe trustee of an RSE should be prohibited from assuming any obligations other than those arising from or in the course of its performance of the duties of a trustee of a superannuation fund.The Government agrees to addr

59、ess the risks associated with dual regulated entities by prohibiting trustees of a Registrable Superannuation Entity (RSE) assuming obligations other than those arising from, or in the course of, its performance of the duties of a trustee of a superannuation fund.Recommendation 3.2 No deducting advi

60、ce fees from MySuper accountsDeduction of any advice fee (other than for intra-fund advice) from a MySuper account should be prohibited.The Government agrees to prohibit the deduction of any advice fees from a MySuper account (other than for intra-fund advice).Recommendation 3.3 Limitations on deduc