Research finds ASIC contracts with financial services deter misconduct

A UNSW study has found that financial services and credit providers fear being sanctioned by Enforceable Undertakings (EUs), despite speculation that the regulatory contracts are ineffective.

The Australian Securities and Investments Commission (ASIC) released the pilot study on the deterrent effect of EUs, which are contracts between the regulator ASIC and a financial service or credit provider.

The study was led by Professor Dimity Kingsford-Smith, who is the MinterEllison chair of risk and regulation and the director of the UNSW Centre for Law Markets and Regulation (CLMR).

The CLMR team was engaged by ASIC in June last year (2017) to undertake the pilot study in response to a recommendation of the Australian National Audit Office (ANAO) that ASIC should periodically assess the effectiveness of EUs.

The study found that financial services and credit providers wanted to avoid the perceived effects of harsher sanctions, such as civil penalties.

Permanent job vacancies up more than 10 per cent

The latest Sunsuper Australian Job Index has revealed that although the job market fell slightly in the September quarter (-1.6 per cent), contingent demand was up year-on-year, and permanent job opportunities grew by 10.3 per cent in the last year.

Sunsuper’s chief economist Brian Parker said this can be attributed to a strong employment market, one where employers are confident to hire permanent staff, looking to lock in skills and minimise talent shortages.

Businesses call for super overhaul for future generations

Keating’s super meets the digital natives: The next generation of super, a Mercer research report in collaboration with social demographer Bernard Salt found that more than a third of Australian businesses believed the current superannuation system should be overhauled for the future generations of workers, and more than half believed the system needed “adjustment” to remain relevant.

The survey of 80 business leaders also predicted big changes for the future labour force, with:

  • 53 per cent predicting an increase in women employees;
  • 41 per cent expecting a decrease in male employees;
  • 54 per cent forecasting an increase in contractors as the expense of permanent staff;
  • a sharp spike in part-time workers, both men and women; and
  • more employees aged 60 years and older.

Mercer CEO Ben Walsh said it was time to reassess an “outdated” Superannuation Guarantee system to ensure it was still “fit for purpose”.

“A savings scheme structured 28 years ago to reward a lifetime of uninterrupted employment with one firm no longer reflects the trend towards casualisation and contract work, and the job flexibility increasingly being demanded by emerging generations,’’ Walsh said.

Bernard Salt agreed: “Superannuation of the future needs to be portable both within Australian workplaces, and even globally … The next generation of super needs to reflect the agility, the diversity, the globalness, the lifestyle choices of Australians today, that indeed the workplace now recognises.”

ASIC announces review of school banking

ASIC has announced that it will commence a review of school banking programs in primary schools.

Deputy Chair, Peter Kell said, “Transparency around school banking programs is important. ASIC wants to understand the motivations and behaviours around school banking programs to ensure they ultimately serve the interests of young Australians, and to enable school communities to have an understanding of the potential impact of these programs.”

ASIC will consult with various stakeholders including from the education sector, consumer organisations, other regulatory agencies, as well as the banks offering the programs.

It is expected the review will be complete by mid-2019.

Recent political turmoil causing Millennials to spend less

With the ongoing political turmoil and the Royal Commission into the financial services industry, nearly half of Millennials are spending less than six months ago and considering changes to their investment strategy, according to research conducted by Raiz Invest.

More than 1000 young Australians were asked about changes in their spending and savings habits, as well as trust in major institutions around personal finances—including superannuation, savings and investment funds—to uncover the impact of these major events on their behaviour.

Key findings from the research showed that:

  • nearly one in three (29 per cent) mistrust their financial institutions with their super, with a third (34 per cent) remaining neutral
  • a quarter of respondents no longer trusted financial institutions with their investment funds
  • only 31 per cent expressed trust in the Federal Government
  • more than half (51 per cent) of Millennials are risk averse when it comes to investing.

AMP agrees to sell wealth protection and mature businesses

AMP Limited has announced the successful completion of its portfolio review including an agreement to divest its Australian and New Zealand wealth protection and mature businesses (AMP Life) and reinsure New Zealand retail wealth protection for total proceeds of A$3.45 billion.

Mike Wilkins, AMP’s Acting CEO, commented: “The completion of our portfolio review marks a major step forward in reshaping AMP as a simpler, more focused group, that is well positioned to compete in our core markets.”