CBA's bad month gets even worse

CBA's bad month gets even worse

Australia’s banking regulator will establish an independent prudential inquiry into the Commonwealth Bank.

APRA said the inquiry’s goal would be to identify any shortcomings in the governance, culture and accountability frameworks and practices within CBA.

The inquiry would also make recommendations as to how these shortcomings are promptly and adequately addressed, according to APRA.

“It would include, at a minimum, considering whether the group’s organisational structure, governance, financial objectives, remuneration and accountability frameworks are conflicting with sound risk management and compliance outcomes,” the regulator said.

“The independent panel would not be tasked with making specific determinations regarding matters that are currently the subject of legal proceedings, regulatory actions by other regulators, or customers’ individual cases.”

The inquiry will be conducted by an independent panel, to be appointed by APRA.

APRA expects the inquiry will take six months to produce its report, and that this report will be made public.

Commonwealth Bank will pay for the costs of the inquiry.

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Confidence needs to be restored

APRA chairman Wayne Byres said the inquiry followed a series of issues that had raised concerns about governance, culture and accountability within CBA.

“The overarching goal of the prudential inquiry is to identify any core organisational and cultural drivers at the heart of these issues and to provide the community with confidence that any shortcomings identified are promptly and adequately addressed,” he said.

“CBA is a well-capitalised and financially sound institution. However, beyond financial measures, it is also critical to the long-run health of the financial system that the Australian community has a high degree of confidence that banks and other financial institutions are well governed and prudently managed.”

A month of bad headlines

This has been a bad month for CBA, which was accused of more than 53,000 financial violations by Australia’s financial intelligence and regulatory agency.

That was followed by news that Maurice Blackburn had launched a class action lawsuit against CBA and that the bank would have to refund about $10 million after selling unsuitable consumer credit insurance to tens of thousands of Australians. The retirement of chief executive Ian Narev was also announced.

But Commonwealth Bank did have one piece of good news in August – a $9.9 billion annual profit.

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CBA promises to cooperate

Commonwealth Bank said it supported the inquiry and that it would have the bank’s full cooperation.

“We are confident that our 50,000 people come to work each day to give their best, for the benefit of our customers. At the same time, we know that our mistakes have hurt our reputation,” Mr Narev said.

“An independent and transparent view on the work we have done, and the work we still have to do, is an important element of strengthening trust. So this inquiry has our full support, to ensure it is as effective as possible.”

Government backs inquiry

Treasurer Scott Morrison said he supported an inquiry to identify the core organisational and cultural drivers at the heart of recent issues relating to the CBA.

“Australia’s banks are well capitalised, well regulated and financially sound. However, there have been too many cases and events that have damaged their reputation and standing in the eyes of many Australians, that warrants our regulators taking action now. In the case of CBA, more than a dozen compliance issues have arisen since 2008,” he said.

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When you apply for an ING home loan pre-approval, you might be required to provide proof of employment and income, savings, as well as details on any on-going debts. The lender could also make a credit enquiry against your name. If you’re pre-approved, you will know how much money ING is willing to lend you. 

Please note, however, that a pre-approval is nothing more than an idea of your ability to borrow funds and is not the final approval. You should receive the home loan approval  only after finalising the property and submitting a formal loan application to the lender, ING. Additionally, a pre-approval does not stay valid indefinitely, since your financial circumstances and the home loan market could change overnight.

 

 

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While many lenders consider casual employees as high-risk borrowers because of their fluctuating incomes, there are a few specialist lenders, such as NAB, which may provide home loans to individuals employed on a casual basis. A NAB home loan for casual employment is essentially a low doc home loan specifically designed to help casually employed individuals who may be unable to provide standard financial documents. However, since such loans are deemed high risk compared to regular home loans, you could be charged higher rates and receive lower maximum LVRs (Loan to Value Ratio, which is the loan amount you can borrow against the value of the property).

While applying for a home loan as a casual employee, you will likely be asked to demonstrate that you've been working steadily and might need to provide group certificates for the last two years. It is at the lender’s discretion to pick either of the two group certificates and consider that to be your income. If you’ve not had the same job for several years, providing proof of income could be a bit of a challenge for you. In this scenario, some lenders may rely on your year to date (YTD) income, and instead calculate your yearly income from that.

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At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

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The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

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If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

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If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

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Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

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Do other comparison sites offer the same service?

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