Each month we provide a wrap of the biggest issues in personal finance.
In April, The Royal Commission into banking has made headlines almost every day with story after story emerging about misconduct by some of Australia’s most recognisable institutions. Spaceship, the millennial superfund (which we wrote about recently here), was in the press for all the wrong reasons as it got stung with a $25,000 fine by the regulator. Investment interest rates may start falling soon as the Australian regulator of banks removes a cap on loan growth.
Horror Show At Royal Commission
All through April the Royal Commission into banking has hit the headlines like it is a reality TV show. Every one of Australia’s major financial institutions have been put under the blowtorch – a Westpac planner gave advice that led to a couple’s financial ruin, at least 5 CBA planners admitted to knowingly charging decade long dead people for financial advice and AMP admitted to lying to the regulator about it’s misconduct (an action that has led to the resignation of its CEO). The outcome of the commission will only be known when new regulation is handed down off the back of it (likely to be over a year away) but the sense of mistrust in our financial institutions is only going to increase – an issue we discuss in this blog post.
Spaceship Fined $25,000
Spaceship, one of the new wave of superannuation funds launched recently, has been hit with $25,000 worth of fines by the corporate regulator for “misleading claims” in it’s advertising. According to the regulator, Spaceship’s advertising:
“We will fight to get you the very best assets in your portfolio … We will measure companies in our portfolio based on their ability to provide defensibility of profits and high levels of product differentiation”
Is misleading as “79 per cent of the fund was invested in index-tracking funds at the time, involving no qualitative analysis of underlying companies.”
In Plenty’s view, this fine is harsh however it is a valuable lesson for other companies operating in the space. Spaceship has been a victim of its own success with the regulator singling it out due to their burgeoning popularity.
As we discussed in this blog post, in Mid 2015 APRA (the regulator of banks in Australia) decided that banks were not allowed to grow their property investment loans by more than 10% per year. As of the 26th of April, this cap has been removed which may put a bit of downward pressure on investment interest rates (yay!). However, the banks have been introducing tougher hurdles to get a loan, so the celebration may be short lived.
Plenty can help advise you on your mortgage and make sure you are in the best deal possible.
The information contained on this page is of a general nature and may not be appropriate for your personal circumstances. You should obtain personal financial advice before acting on this information.