Browsing articles in "Regulation"
Tuesday 3rd November 2015 - 10:21 am
Comments Off on Investors:don’t get hooked on-line!

Investors:don’t get hooked on-line!

by Alan Thornhill

The on-line advertisements and emails looked good.


On-Line Capital Markets Pty Ltd promised substantial returns to those who used its financial services.


What’s more, they were quite specific.


“$2533 in Just 7 Days!” and


“Learn how you can increase your monthly income”


Were among them


The trouble, as happens all too often, is that they just weren’t true

The Federal watchdog, the Australian Securities and Investments Commission,eestablished that by doing a little digging


The upshot was that OCM has now paid a total of $30,600 in penalties, after ASIC issued three infringement notices against this operator for false or misleading online advertising.
No-one imagines, of course, that this will be the end of the matter


Easy money will still have its allure
That’s why ASIC issued a statement today, urging investors to take care.


It said OCM’s advertisements and e-mails had promoted its margin foreign exchange trading platforms


Foreign exchange derivatives and contracts for difference were among the products offered for trading.


But ASIC said it had believed that the advertisements and emails were misleading because


  • They gave the impression that OCM’s service could be relied upon to provide substantial profits quickly and to consistently increase monthly income


* They did not adequately convey that trading in margin foreign      exchange derivatives and contracts for difference is high risk, provides volatile returns and does not guarantee consistent profits and

*    While they referred to risks and contained disclaimers, these      messages were in fine print and were ineffective to correct the dominant message created by the headline claims
ASIC Commissioner Greg Tanzer said ”Margin foreign exchange and derivative trading is high risk and gives volatile returns.


Consumers should not be misled by false claims about the level or consistency of returns achievable from such trading.’


Mr Tanzer noted that the payment of an infringement notice is not an admission of a contravention of the ASIC Act consumer protection provisions.


He said ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.

Please visit our sponsor
Tuesday 20th October 2015 - 1:39 pm
Comments Off on What’s in it for you: the PM explains the government’s response to the FSI

What’s in it for you: the PM explains the government’s response to the FSI

by Alan Thornhill

Malcolm Turnbull told reporters in Canberra today that the final report of the Financial system Inquiry, led by David Murray,  and published on December 7 last year, had satisfied an election promise.


“The financial system affects all Australians. It plays a vital role across the Australian economy, contributing to productivity and growth,” the Prime Minister said.


“The biggest decisions Australians make in life – buying a home, providing for our retirement, or starting a business – are all supported by our financial system.”


“The Government has accepted the overwhelming majority of the Inquiry’s recommendations.”


“The response also includes six additional measures that will help to deliver a financial system that is efficient, resilient and fair,” he added.



“The Government’s response improves our financial system and builds on existing policy. The Government’s financial system agenda will be implemented in stages over the coming years, helping Australia respond to the challenges and opportunities that the future brings.”


Card surcharging


“We will legislate to ban merchants from imposing unfair card surcharges that are greater than the cost to them of accepting payment by card. The Government will work with stakeholders on the legislative response and phasing of the implementation,” Mr Turnbull said.


“We will make the Australian Competition and Consumer Commission responsible for enforcing these surcharging regulations, to ensure consumers are treated fairly and not over?charged when they pay using a card. We also endorse the Payments System Board’s ongoing review of interchange fees.”





“The financial system agenda includes a number of measures that will improve the level of competition, efficiency and transparency in the superannuation system. This will improve after-fee returns for fund members.”


“The Productivity Commission will develop criteria and then assess how efficient and competitive the superannuation system is and develop alternative models for allocating default fund members to products.”


“We will also work closely with industry to provide retirees with more flexible and reliable retirement income products and move to extend the choice of fund arrangements to more employees as recommended by the Inquiry.”

“We have introduced legislation to enhance superannuation governance arrangements and require that at least one third of all Australian Prudential Regulation Authority-regulated superannuation fund trustee boards are comprised of independent directors, including the chair.”



“Innovation is a driver of productivity and growth in the financial system.”


“The Government has consulted stakeholders on a regulatory regime for crowd-sourced equity funding and will negotiate draft legislation to implement before the end of 2015. We will soon begin consultations to facilitate crowd-sourced debt funding.’


Financial advisers


“Measures will also ensure that consumers receive professional and fair treatment from advisers and financial product and service providers.”


“More needs to be done to make the issuers and distributors of financial products accountable for their offerings.  We will consult extensively about product design and distribution obligation and a new product intervention power for Australian Securities and Investments Commission.”


“The Government will raise professional, ethical and education standards for financial advisers. Subject to transitional arrangements, advisers will be required to hold a degree, pass an exam, undertake continuous professional development, subscribe to a code of ethics and undertake a professional year before they can advise clients.”


“These higher standards will, for the first time, place financial advising on a similar footing to other professions and in doing so increase consumer trust and confidence in the sector.”

“The Coalition Government will soon hold a roundtable with key stakeholders to discuss the implementation details of this important reform.”


Life insurance
“In June, Minister Frydenberg announced reforms to improve remuneration practices in the life insurance industry and the Government will adopt the industry’s proposals.”




“Australia’s banks are at the core of our stable financial system and fundamental to the broader economy. The Government endorses APRA and the steps it is taking on capital requirements to ensure our banks are unquestionably strong.”


“Our agenda will strengthen the accountability and capabilities of APRA, ASIC and the Payments System Board. Strong and accountable regulators underpin the smooth operation of the financial system. We will be further informed by the findings of the ASIC capability review.”




“On 1 September we announced the Government won’t proceed with the previous Labor Government’s Financial Stability Fund levy.”


“On 9 September 2015, the Government passed legislation to fix unclaimed moneys. The change meant bank accounts could be inactive for seven years instead of three, before they are transferred to the government. ”

“This reversed the previous Labor Government’s decision and protects Australian savings accounts.”


“The Government has agreed to Senate amendments to extend unfair contract term protections to small business.”

“These changes will cover standard form contracts where at least one of the parties employs less than 20 people and where the upfront price of the contract does not exceed $300,000, or $1 million for contracts longer than 12 months.”


“The Government sets out a blueprint for an efficient and resilient financial system, characterised by fair treatment of users.”


“Australians can now be confident that our financial system remains the best in the world,” Mr Turnbull said.


The Government response to the Financial System Inquiry can be found at

Monday 5th October 2015 - 9:13 am
Comments Off on Economists advise RBA to keep cash rate on hold

Economists advise RBA to keep cash rate on hold

by Alan Thornhill

The Reserve Bank should keep official interest rates on hold, when its board meets tomorrow to review them.


This advice comes from the bank’s “shadow board”, chaired by Dr Timo Henckel, an economist based at the Australian National University.


In a statement today, Dr Henckel, said the bank should hold its marker rate at 2 per cent, even though the weakening global outlook and uncertainty in capital markets pose risks for the Australian economy.


The RBA Board lowered the official cash rate from 2.25 per cent to 2.0 per cent in May.


Dr Henckel said while Australia’s inflation estimates of 1.5 per cent were well below the RBA target band of 2.0 to 3.0 per cent, the RBA Shadow Board considers the present marker rate to be the appropriate setting.


“A weakening outlook for the global economy and jittery financial markets do not portend well for the Australian economy,” Dr Henckel said.


“With latest estimates of inflation at 1.5 per cent and delayed action by the US Fed, the RBA Shadow Board on balance prefers to keep the cash rate on hold, attaching a 72 per cent probability to this being the appropriate policy setting.”


The RBA Shadow Board is a project based at the Centre for Applied Macroeconomic Analysis (CAMA) at the ANU Crawford School of Public Policy.


It brings together nine of the country’s leading experts to look at the economy and make a probabilistic call on the optimal setting of interest rates ahead of monthly RBA Board meetings.
It does not try to predict RBA behavior.


Dr Henckel said domestic data is still mixed.  Australia’s property market is still looking strong, with the construction PMI surging to 53.8 in August, from 47.1 in July.  However, in the same month building permits fell nearly 7 per cent.


He said the local stock market has also been hit, with the S&P/ASX200 closing below 5000 last week.


“With heightened uncertainty affecting global capital markets, it is unlikely domestic share prices will rebound significantly,” he said.


Dr Henckel said the Shadow RBA Board attached a 72 per cent probability that 2.0 per cent should be the appropriate setting for the cash rate, down from 77 per cent in September.


It found a 14 per cent probability of a needed rate cut, up from nine per cent last month, while the probability of a rate rise remained steady at 14 per cent.


In the longer term, the Shadow RBA Board placed a 62 per cent probability on the need for rates to increase in six months, with only a 25 per cent probability on the need for rates to remain at 2.0 per cent.


The probability of a needed rate cut in six months was 13 percent.


The RBA Shadow Board includes Professor Bob Gregory and Professor Warwick McKibbin, who have both served on the RBA Board.

Other members are Paul Bloxham of HSBC; Dr Mark Crosby; Professor Guay Lim of the University of Melbourne; James Morley of University of New South Wales; Jeffrey Sheen of Macquarie University; Mardi Dungey of University of Tasmania; and John Romalis, Professor of economics at the University of Sydney.




       Alan Thornhilll”s new novel Weathercoast can be seen at

Thursday 1st October 2015 - 12:40 pm
Comments Off on Why some are worrying about PM’s mini-summit

Why some are worrying about PM’s mini-summit

by Alan Thornhill

Events like today’s economic mini-summit can worry particular groups.

And this one is no exception.

That shouldn’t surprise anyone.

After all, it’s no secret that some very high powered – and persuasive – people in Canberra believe a higher GST would be good for the nation.

However others are arguing – anxiously – that this is not the time to take that path.

The Urban Development Institute of Australia (UDIA) is among them.

The UDIA, which describes itself as the peak body representing Australia’s urban development industry isn’t opposed to tax reform.
In fact, in a statement today, it renews its call “for a major shakeup of Australia’s tax system.”
But it also warns that a higher GST would present “a negative shock to both housing affordability and the economy,

In a statement today, it said:” the UDIA is urging recently appointed Prime Minister Malcolm Turnbull and his new ministry to revitalise tax reform discussions with businesses and the broader community, so that a well-considered package of reforms can be taken to next year’s election.

The UDIA ‘s National President Cameron Shephard said: “a great deal of Australia’s economic potential is being held back and squandered by a tax system that has failed to keep up with the times.”

“Inefficient taxes and charges are dragging on economic growth and productivity, holding back jobs, and worsening Australia’s housing affordability crisis.”

“For example, stamp duties are well known to be among the least efficient and most economically damaging taxes available to governments and there is a strong and growing consensus across the community about the need for governments to replace them with something better” Mr Shephard said

“They reduce labour mobility and productivity by locking people into a certain location and – along with other high up front taxes and charges – reduce housing affordability and the supply of new housing. ”

“In contrast, the GST and taxes on the value of land are widely recognised as being much more efficient from an economic perspective, particularly when applied across a broad base.”

However UDIA has strongly warned against raising the rate of the GST, which could raise the cost of new housing substantially at a time when housing affordability is a major concern. ”

“Increasing the GST by just a few percent could result in tens of thousands of dollars in additional tax on new homes, which would push up prices further and reduce the supply of new dwellings”

The UDIA has even done some sums, to bolster its case.

It calculated how much raising the GST from 10 to 15 per cent would add to house prices in Australia’s capitals.

It’s results were

Sydney……………… $42,266

Thursday 24th September 2015 - 11:58 am
Comments Off on Malcolm Turnbull tackles domestic violence

Malcolm Turnbull tackles domestic violence

by Alan Thornhill

Malcolm Turnbull declared today that violence against women and children is never acceptable, as he unveiled a package to tackle domestic violence.

The $100 million package is heavily symbolic, as it is the first formal business announced by Mr Turnbull, since he became Australia’s Prime Minister last week.

Domestic violence has already claimed the lives of 63 women this year.

In a joint statement, with four of his ministers, Mr Turnbull declared:” Women and children in Australia have the right to feel safe and live without fear of violence.”

The others, joining him in the statement, were the Minister for Women Senator Michaelia Cash, the Attorney General, Senator Brandis, the Health Minister, Sussan Ley and the Social Services Minister, Christian Porter.

They said:”We must elevate this issue to our national consciousness, and make it clear that domestic, family or sexual violence is unacceptable in any circumstances. ”

“Today the Australian Government is announcing a $100 million package of measures to provide a safety net for women and children at high risk of experiencing violence.”

“The package will improve frontline support and services, leverage innovative technologies to keep women safe, and provide education resources to help change community attitudes to violence and abuse. ”

“The package includes $21 million for specific measures to help Indigenous women and communities.”

The Ministers noted that the Council of Australian Governments had made domestic violence a national priority.

And they said:”governments are acting.”

However they admitted:”recent events show we are not moving fast enough.”

Saturday 19th September 2015 - 4:35 pm
Comments Off on International students:Australia overhauls the rules

International students:Australia overhauls the rules

by Alan Thornhill

Australia is to streamline provision of its international education services, cutting the red tape and duplication now required from those who provide it.
The Education Minister Christopher Pyne explained as he introduced the necessary legislation into parliament today that education is now Australia’s biggest non-resource export.

He said the new law would streamline regulation, remove duplicative requirements and cut red tape for Australia’s international education providers.
Mr Pyne said the Education Services for Overseas Students (Streamlining Regulation) Amendment Bill 2015 removes unnecessary reporting from the ESOS Act while protecting the high quality of Australia’s international education sector.
“International education is Australia’s largest non-resource export and generates an estimated 130,000 jobs throughout the country,” Mr Pyne said.
“The Government is committed to growing our international education sector while ensuring high levels of student protection and quality assurance.

“The Bill I have introduced today will generate an estimated $76 million a year in deregulatory savings for our education institutions.”
Mr Pyne said the reforms to the ESOS Act would enhance the quality of Australia’s international education institutions and create a more appropriate and efficient regulatory framework.
He said the Government had undertaken extensive consultation and  worked closely with the international education community, peak bodies and national quality assurance agencies in preparing the reforms.
“This Bill demonstrates the Australian Government’s commitment to cutting red tape while improving Australia’s reputation as a high quality, world class destination for international students,” Mr Pyne said.

AlanThornhill has just published his e-novel Weathercoast. 


Seven young Anglican Christian brothers were killed, as spies, during recent “tension troubles” in the Pacific, for trying to bring peace to their troubled Pacific homeland, the beautiful Solomon Islands. Yet the sacrifice of these brave men, martyrs in the truest sense of that once honorable word, is barely recognised, if at all, in the wider world. How did that happen? Alan Thornhill, who attended the trial of their killers, attempts to explain – and looks at the lessons – in his e-novel, Weathercoast.It’s available at


Lukim Iu




Thursday 10th September 2015 - 8:02 am
Comments Off on The remaining questions

The remaining questions

by Alan Thornhill


A double victory is possible.

The decision the Prime Minister announced yesterday, to take an extra 12,000 refugees, from Syria and the Middle East, did follow a strong campaign by his critics.

And many Australians will regard it as – clearly – “the right thing” to do.

Even if the motives remain questionable.

It is, after all, only a few days since Mr Abbott was declaring that if more refugees were to be taken from Syria, the intake from other areas would have to be cut.

So perhaps Tony is learning to listen.

That would be something.

After all, Tony Windsor – a former – and perhaps future – MP – who knows Mr Abbott well, has described him, in a recent newspaper article, as a “brawler” who would rather fight than govern.

Or listen.

So his softening, on the Syrian refugee issue, might well be seen as a victory, in that sense, too.

Unkind people, of course, will suggest that it has something to do with the upcoming Canning bye-election.

Especially as some pundits have already suggested that Mr Abbott’s grip on his present job, that of Prime Minister, would not survive a poor result for the Liberal candidate in that contest.

Some cynics have even been saying noted that the government’s new intake figure – 12,000 – is just a little bigger than the 11,000 that Labor has been talking about.

But don’t listen.

What harm would there be in giving Mr Abbott a little credit, at least for now, for his decision to take in 12,000 vulnerable people, who have been displaced by war in Syria and Iraq.

That, of course, was only one of three decisions taken yesterday.

The Abbott government also decided to give $44 million to the UNHCR, to purchase blankets and other urgently needed relief supplies, for other displaced people, trapped in the conflict zone.

That decision, too, will probably be given a big tick by most Australians, even if Pauline Hanson is worrying, publicly, about “where the money is coming from.”

Some people are very hard to please.

What, though, of that other decision taken yesterday?

That, of course, is the decision to extend Australian air strikes into Syria.

Even bigger questions still hang over that.

What, realistically, can the Australian government be expecting to achieve, as a result of it, for example?

And, of course, what comes next?

Tuesday 8th September 2015 - 1:08 pm
Comments Off on “A parade of stuff happening?” an RBA chief wonders

“A parade of stuff happening?” an RBA chief wonders

by Alan Thornhill

A senior Reserve Bank executive today urged caution in linking property cycles and financial stability.

Luci Ellis, who Heads the Bank’s Financial Stability Department, admitted that there are still gaps in our knowledge of the subject.

She was addressing a Real Estate Symposium at the University of New South Wales.

There have been persistent worries, over recent months, over the possible impact that a sudden end to the house price booms in Sydney and Melbourne might have on the broader economy.

Ms Ellis said the present financial crisis had certainly “ramped up” interest in this subject.

But – because of the crisis – much research was finding its way very quickly into policy conclusions.

“That’s a natural temptation when the stakes are so high,” Ms Ellis said.

“But the policy imperatives inspiring the work make it even more important to be scientific in our approach.”

“It is an exciting time to be working in this area,” Ms Ellis said.

“Financial stability and property markets are inextricably linked.

“It’s an important topic.

“And yet there is still so much to learn.”

“In many respects I am reminded of the early 1990s and monetary policy.”

“Inflation targeting was fairly new.”

“Around the world there was important foundational work on how this new approach to monetary policy should operate.”

“Some of that work took place at the Reserve Bank.

“We learned a lot along the way.”

“I often feel that we are at a similar point now in financial stability policy world as we were back then on monetary policy.”

Ms Ellis confessed that she sometimes found it hard to keep up with the flow of academic research on the subject.

” Despite these difficulties, I think it’s fair to say that we already know quite a bit about property markets and financial stability,” she added.

“There is certainly a lot of evidence – or at least some strong indications – that property has something to do with the boom-bust episodes that so often engender financial instability and crisis,” Ms Ellis said.

“What we don’t yet know in all this is what the mechanism behind these connections really is.”

“We do know that there are strong correlations between strong upswings in credit, measured in a variety of ways, strong growth in property prices, and subsequent bad events,” she added.

“What isn’t yet settled is whether the credit causes the prices, the property markets drive the credit, or whether either of these is the decisive factor in generating economic downturns or financial distress.”

Ms Ellis said there is some interesting recent literature that tries to tease out these relationships.”

“But I don’t think the profession has reached a consensus on this as yet.”

“As soon as you start to talk about preventative policy, though, you should at least have a good theory about the mechanism, and some evidence to back it up.

“Otherwise, how can you distinguish what is really causal, from what is merely a correlation?”

“Another issue that I do not consider to be settled is whether we should regard these boom-bust dynamics as a cycle, and if so, whether it represents a credit cycle that is somehow independent of the business cycle,” Ms Ellis added.

“Certainly there have been many papers asserting the existence of a credit or financial cycle that has a longer frequency than the conventional business cycle frequency, which is usually assumed to be much less than a decade.”

But she warned:”I would be wary of assuming too readily that property finance really is the driver of the cycle in the way some literature has claimed.

“It might well be, but some recently released empirical analysis suggests that, for the United States at least, it is unsecured corporate borrowing that drove the cyclicality in business credit in recent decades….”

A range of one-off triggers for booms had been mentioned in the literature.

These included new products, political change and financial deregulation.

“If that’s right, perhaps we should not speak of a cycle, but rather, simply a parade of stuff happening,” Ms Ellis said.


My book

wx 2

Weathercoast by Alan Thornhill

A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.

Available now on the iTunes store.


Alan Thornhill

Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.

Please visit our sponsor
Please visit our sponsor


News Archives