Newsletter

  • More Punishment? | Cancel Culture | Time Thief – Talking Points From Money Road

    More Punishment? In eight days,  the Reserve Bank board will weigh the consequences of increasing the cash rate again. For the most part the denizens of Money Road  expect a hike from 3.1% to 3.35%, but a chorus of influential commentators is arguing  that enough is enough.  Writing in The New Daily, Michael Pascoe suggests the RBA do nothing or risk a recession.  The Guardian’s, Greg Jericho, takes a similar line arguing that the RBA should allow time for the impact of the  earlier rate rises to flow through. “Inflation is falling, it’s just not yet visible in official figures”. Alan Kohler asks how long it will be before we stop using  human misery to control inflation. He says that the Reserve Bank is punishing Australian borrowers for events out of their control and spreading misery throughout the community by continually hiking interest rates.   Cancel Culture After a lengthy period of discussion, the Australian Banking Association says it members  will continue to arbitrarily cancel the accounts of sole traders and small businesses they don’t like. Neither  do they see a reason banks should  provide customers with an explanation. It’s called debanking and is generally used to deny services to the likes of cryptocurrency traders, brothels, sex shops, tattoo parlours, firearms dealers, mining companies and the farming sector.  Even family members unrelated to a business have been debanked, according to this report in Smart Company.  Time Thief It’s a little off topic, but a talking point too good to ignore.  News Ltd reports the case of  a Melbourne employer who docked an employees wages for spending too much time on his mobile phone – even watching a movie. The employer calculated the staffer wasted five hours of  a nine hour shift.  Naturally, the worker complained loudly to his friends on social media who piled into the boss. To no avail. The employer stood firm and produced further evidence of the worker’s torpid state while supposedly at work.  Fighting Fraud The era of open banking is well and truly upon us.  Loan aggregator, Finsure,  is making open banking data available to the 2,500 brokers working under its umbrella. What is open banking? In this instance,  mortgage  brokers, with a borrower’s consent, would get access to their  historical and current banking records and personal information to help assess a loan application.  Lenders say it will help them avoid fraud and speed up the loan process by providing  immediate insight into a borrower’s long-term financial behaviour.  Sleepless Nights Inflation, staff  shortages and weak supply chains are the three issues  keeping Australia’s CEO’s awake at night, according to a  survey of 280 business leaders conducted by the Australian Industry Group.    Have a great week.   If you or your clients need funds for a business we could help. We are specialists in invoice finance, trade finance and supply chain finance. You can contact  me on 0411 535 096.  Paul Ransley 

    December 21, 2023
  • Mortgage Hell | Bad News Bonanza | ACCC Warning & More News From Money Road

    Mortgage Hell If you bought a property with a fixed loan in July 2021 your interest rate would have been a very reasonable 1.97% p.a. However, when your loan expires later this year – as many thousands will – your  new interest rate could be as high as 7.19% – assuming the cash rate is hiked by the predicted 75 basis points. Many homeowners who borrowed to the limit back in 2021. Will find themselves in mortgage hell. First, lenders will apply a new serviceability test. If they fail they could be denied a loan. Secondly, borrowers could find themselves paying tens of thousands of dollars for lender’s mortgage insurance if the value of their properties is deemed to have slipped and the loan-to-value ratio is greater than 80%.  Stand by for some very ugly headlines in the coming months. Bad News Bonanza Banks are salivating at the thought of $478 billion worth of refinance loans coming back on the market.  Competition to capture a share of this potential bonanza is fierce with 34 lenders offering cashback deals ranging from $1,000 to $5,000. The CEO of Australian Finance Group, David Bailey says he has never seen the refinancing market so competitive.  Don’t be fooled if you are considering a cashback deal. You’ll pay for it down the track. Ludicrous While banks are pumping up their mortgage rates, it appears they are not so keen to share the increased revenue with depositors. Many savers are still earning less than 1% on their hard earned cash, according to the folks at RateCity. So, it’s welcome news that the Federal Treasurer has asked the ACCC to investigate how the banks are handling savings account interest rates. RateCity research director, Sally Tindall said,  “It’s ludicrous to think that some accounts are still offering ongoing savings rates below 1 per cent, when the market leaders now have rates over 4.50 per cent.” Warning Don’t delete your Zoom app just yet. Flying in for a face-to-face meeting is still problematic. Airfares remain up to 30% dearer than they were before the pandemic.  You can’t find a cheap discount fare for lover or money.  The airlines don’t need to offer them because they are not flying as many planes and those that do get into the air  are packed to the brim.    The good news for shareholders is that all three airline groups are forecasting profits this financial year after three years of significant losses. The information is contained in the Airline Competition in Australia report from the ACCC which has warned the airlines not to deliberately reduce flights just to maintain high fares.  Pressure Pressure is mounting on the federal government to introduce tough regulations forcing BNPL companies to follow the same “responsible lending” practices as other credit providers.  The government is currently considering three proposals the most severe of which is the “responsible lending” requirement.  MoneyMe boss, Clayton Howes, says because BNPLs are not compelled to provide credit data about their customers, it creates a dangerous blind spot for other lenders approached to provide funds – a reasonable point if the aim is to protect borrowers from themselves. Consumer groups and Westpac, which does not have a BNPL product, are also backing the tough option. It won’t surprise you that NAB, which lends to the BNPL sector, favours a softer option. Bonus Read The philosopher, Bertrand Russell, identified four desires driving all human behaviour. They are acquisitiveness, rivalry, vanity and love of power. He explained them in his acceptance speech when he received the Nobel Prize. If you are interested in an enlightened read follow the link.  Have a great week.   If you or your clients need funds for a business we could help. We are specialists in invoice finance, trade finance and supply chain finance. You can contact  me on 0411 535 096.  Paul Ransley 

    December 21, 2023
  • Poor Service Shames NAB | Accountants Troubled | Wild West Claims Aussie – Money Road in 2023

    Welcome to 2023 and the first Money Road Newsletter of the Year. There’s been plenty of bad news during the holiday period with not much else to talk about other than the  “impending collapse” of  the housing market.  However, there have other talking points which might have escaped your attention and, as always, we’re here to fill in the gaps. NAB Shamed Banks are staffed by humans and humans make mistakes, so it’s no great surprise that a sum of money could suddenly disappear from an account. With fraud not an issue, one would think the glitch would  be resolved pretty quickly and all forgiven. Shamefully, no.  A Queensland business owner got nothing but obfuscation and gobbledygook from bank officers at National Australia Bank when he asked what happened to $375,000 mysteriously disappeared from his account just before Christmas. Days of waiting for an answer forced him to contact the media. It was only a call from a journalist that unlocked a brain cell at the bank and the return of the money. Shameful customer service. Accountants Troubled Accountant’s who are asked by a lender to confirm the  income and financial status of a client find themselves in a tight corner. Their peak body has advised them to refuse this common practice  because if the client defaults the accountant risks being sued by a lender looking for a fall guy (an unconfirmed story currently circulating in the industry is of an accountant who spent $400,000 on legal fees defending such an attack). On the other hand, if the accountant refuses to provide a loan letter they could lose a good client. Feelings are running high to the extent that Chartered Accountants ANZ has been told by its members to talk to the banks and sort it out – that accountants should not be used to mitigant lender risk.  Some members are calling for those who write loan letters to be banned from the organisation. Wild West Claims Aussie Victim Australian born AfterPay , once the flagship of the Buy Now Pay Later industry, has abandoned its operations in New Mexico bidding farewell to customers because of regulatory changes in the State. Legislators have introduced new laws limiting fees on late payments and lowering the cap on small loan interest rates from 175% to 36%.   Meanwhile, BNPL’s in Australia anxiously await deliberations to determine new lending rules for  the industry.  Treasury identified three options. Westpac supports the toughest which requires BNPL’s to apply the same lending criteria as the banks.  It’s hard to see how the industry could survive that.  A one month consultation period ended in December, so now its up to the bureaucrats and politicians.  Alex Who? There’s a strong possibility you’ve not heard of Alex Bank. It’s a two-year-old Australian online lender specialising in personal and consumer loans with ambitions to offer mortgages and small business finance.  Alex boasts about 2,500 customers and is now celebrating its new status as an Authorised Deposit-taking Institution (ADI) – an honour bestowed by the Australian Prudential Regulation Authority.  This is a proud moment, said it’s CEO, Simon Beitz . It’s also a left-field moment because the path to receiving the coveted ADI prize is littered with the corpses of many other fintechs.  Xinja and Volt banks handed back their licences as did ME Bank which was folded into BOQ, 86400 was consumed by  NAB and UP Bank  was acquired by Bendigo and Adelaide Bank. You’re Not Alone A recent Treasury report revealed that 20% of small business owners it surveyed admitted to being professionally diagnosed with a mental health condition. Because of the stigma, there’s probably  many more.  It would be a rare business owner who hasn’t at one time or another experienced anxiety, depression, burnout, stress and insomnia – all symptoms of mental distress. Many grit their teeth and get on with it (which can make it worse) , others sadly abandon their dreams and retire from the field hurt. But, help is available. The federal government is kicking in $15 million to provide free mental health and financial counselling to small business owners. More information about the NewAccess for Small Business Owners program is available by calling 1300 945 301 or on the Beyond Blue website.

    December 21, 2023
  • On The Precipice | Shrinkflation | Ubank Schemozzle – Talking Points From The Business of Finance

    Whoa! Enough already This week the business of finance was consumed by another interest rate rise with on-going debate over the wisdom of  the Reserve Bank’s inflation fighting strategies. Some,  like The New Daily’s Michael Pascoe,  argue that it’s time for the RBA to ease off. He writes that  we are on the edge of a precipice and if the Bank continues to hike rates the result could be catastrophic  Sneaky Shrinkflation As if rising interest rates and inflation aren’t enough,  our wallets are also under attack from shrinkflation the  silent and sneaky strategy to get more of our cash for less. The ABC’s Alan Kohler has produced this engaging two minute video explaining the phenomenon. The Full Bottle This one is for the data geeks. How much did Australians spend on overseas trips  in the September quarter? What was the value of lithium exports during the same period? The answers? You’ll find them in a list of “12 things to know about the Australian economy right now” prepared by the Australian Bureau of Statistics. Luxuriate in the numbers if that’s your thing!   UBank Schemozzle – again! Who’d want to be a UBank customer?  Hot on the heels of last week’s tech stuff up, which left  overseas clients unable to access their money,  comes this chiller. A West Australian customer claims that over half a million dollars in life savings disappeared from his account overnight with no explanation from the bank. That was five days ago. No word from the bank if the money has been found yet.  Whatever the explanation – good or bad – the bank needs to get on the front foot and inform its existing and potential customers. Work Less, Earn More This is a little off-topic but worth a read. The respected Planet Money people at NPR have reported on a UK experiment to test the impact of a four-day week with no loss of pay for employees. It is a six-month trial running alongside similar pilot schemes in Ireland, USA, Canada, Australia and NZ.  As the article reveals, not everyone is in love with the idea.

    December 21, 2023
  • Bank Closures |Casino Capers |Rates Dive – The week’s finance & business headlines

    And then there were none.  According to the Finance Sector Union the major banks will close 37 branches in coming months with 182 staff to lose their jobs.  Westpac will shutter 24 branches, CBA five and NAB 8.  The union claims that since 2020 the big four have closed more than 550 bank branches. Maybe the savings are being invested in all those television ads reminding us how important we are to them and how committed they are to our businesses and communities. No kidding In light of the above, It’s hard not to be cynical when CBA’s website claims that the company’s $9.6 billion profit for the year was achieved by “continued focus on service to customers” The bad news Despite a strong profit,  Goldman Sachs rated  CBA’s shares as a sell with a price target of $86.86, according to the folks at Motley Fool.  The current share price is around the $100 mark. NAB tumble News of increasing costs at NAB caused its share price to tumble 4.4% at the start of the week despite a  third quarter profit of $1.8 billion. Rates fall Meanwhile, despite the hullabaloo about rising variable interest rates, CBA has chopped its 4-year fixed  by 1.6 per cent to 4.99 per cent.  Not to be outdone, Westpac, Macquarie and Suncorp have done similar no doubt all convinced that a long-term high interest rate environment is unlikely. VIP  money There is no way in the world you would ever be allowed behind the steering wheel of a car if the law determined you were unfit to hold a driver’s licence..  However, it’s copacetic to run a casino even when you are judged to be guilty of the most atrocious behaviour. Crown Casino has opened its  doors in Sydney to “VIP gamblers”  despite being  found unfit to hold a casino licence by a government inquiry and of having participated in  “illegal, dishonest, unethical and exploitative practices”  Yes, they have had a clean out on the top floor, but it still smacks of one law for some, another for the rest of us. Quote of the week “Our taxation system is full of complexity and the latest tax statistics show that some people on very large incomes are able to pay very smart people very large sums of money to take advantage of that complexity to reduce the amount of tax they have to pay,”  Australia Institute senior economist Max Grudnoff commenting on the fact that 60 Australians earning more than $1 million paid not a scintilla of  tax in the 2019-2020 year.

    December 21, 2023
  • Talking Points Ep 22, 2022 – High Expectations | Two Stupidities |Bubble Bursts | Putrid Crypto | Julie Who?

    The  energy crisis, inflation and  rising interest rates have all dominated the headlines this week. Amongst the grist,  five small business & finance headlines captured and held my attention. What’s engaged you? High Expectations Reserve Bank governor, Philip Low, says he expects inflation to hit 7% by the end of the year and while flagging higher interest rates to bring it under control talks up the Australian Economy. Two Stupidities On the other side of the fence, Alan Kohler argues there are two stupidities behind our inflation which higher interest rates can’t fix.  He says the Reserve Bank could make our cost of living crisis  worse. Bubble Bursts Looming inflation, higher interest rates and a melt down in the markets was obvious to anyone with their eyes open writes  Michelle Celarier, in New York Magazine. She documents 5 super obvious signs of disaster that we all missed. Putrid Crypto If you are considering an escape to Crypto Currencies, forget it. The story of crypto lender Celsius Network reminds The New Daily’s Michael Pascoe of a Ponzi scheme he investigated some years ago. Julie Who? Finally, Smart Company offers up a short profile of the new small business minister, Julie Collins.  It’s not an entirely  flattering read and raises questions about the new government’s commitment to the sector.

    December 21, 2023
  • Talking Points Ep 21 – Barbecued Koalas | Swill | Distorted Reality | Gender Gaffe

    Most of the pundits agree that the election campaign produced some bottom of the barrel moments. However, in its wake has come some punditry which is both insightful and entertaining.  Here are my top 5 examples.   Barbecued Koalas Let’s start with the revenge of the barbecued koalas.  Writing in Mother Jones, James West, says reaction to the bush fires from two years ago contributed to the government’s decline, calling the then prime minister “ a thin-skinned spin doctor” Unrepresentative Swill In his blog, Unrepresentative Swill, Malcolm Makerras, ranks  Scott Morrison at 16th  on a list of 30 former  prime ministers…receiving a mark of a high average. Robert Menzies tops the table. Distorted Reality, Wes Mountain argues  in The Conversations that the  ‘reality-distorting machinery’ of the federal election campaign delivered sub-par journalism.  It’s hard to disagree Small Business And, the authoritative John Durie, opines in Smart Company,  that the message for the new government  from small business is loud and clear “it’s the economy stupid”.  He identifies what Labor  must do to keep faith with SMB’s Gender Gaffe Alan Kohler tells readers of the New Daily that this election was Julia Gillard’s victory explaining that  her treatment 10 years ago at the hands of men in both major parties was “the unexploded bomb that finally went off on Saturday” – presumably, the  inferno was fuelled by Scott Morrison’s deaf-eared treatment of some equally high profile women. That’s my top five.  Have a great week ahead. 

    December 21, 2023
  • Talking Points Ep 19 – Taxes| Deregulation| Wages | Payments

    Small business owners should be feeling warm and fuzzy right now.  We have been given more love in the past six weeks than we’ve received in the preceding 4 years.  That’s what you get when there is an election. When it comes to SME Policies the political parties have set a world record in warm and gooey motherhood statements, so I have ignored that stuff and concentrated only on their  headline promises which I present in no order of preference along with links to their policies. Labour says it will introduce  a mechanism to ensure SME’s are paid on time or within 30 days of presenting an invoice. There is no explanation of what the mechanism will be.  And Mr Albanese’s crew is also offering to   reduce transaction costs on payments – currently costing business about $800m a year. The Liberals and their coalition partners  – promise to lower taxes for SME’s  and will not introduce any new taxes. They will also  continue their  so called deregulation agenda, The Greens?  They are offering a 110% wages credit. Which means that a small business with a turnover of up to $2m can claim 110% of its wages bill against its income. The United Australia Party’s headline offer is to end the advance payment of provisional tax and allow it to be paid at the end of the financial year. And, while One Nation does not have a specific small business policy, It does promise to increase the national apprenticeship scheme. So, which is the best party for small business?  The best commentary on that is in the Bank Doctor’s Blog  where Neil Slonim offers a considered and relatively balanced answer. And my promise…if you or a client are looking for working capital and cash flow support, I’ll do the very best I can to help you. Now I’m off to press the flesh. Cheers.

    December 21, 2023
  • Talking Points Ep18 – Recession Warning | Good News| Dark Picture | A Stuff Up

    This week’s media coverage of inflation and interest rate hikes has verged on the hysterical in some instances although a few well-considered and thought provoking pieces have emerged from the fog. Today, I have highlighted 5 expert opinions that I think have added to the debate and perhaps increased understanding by those of us whose economic credentials are poor. Among them is a brutal takedown of the Reserve Bank of Australia, by Sky Business Editor, Ross Greenwood. Here they are in no order of importance: 1. Recession WarningInflation may already be in retreat and the RBA should go easy hiking interest rates or risk a recession, writes Peter Martin the Business and Economy Editor of The Conversation, . He argues that higher rates could add to inflationary pressures – not reduce them. On the other side of the fence. 2. Good NewsThe rise in the cash rate is “unambiguously a good news story” according to Terry McCrann writing in Today’s News Ltd publications (it’s behind a paywall unfortunately…but I have included a link if you have a subscription). The key reason it is such good news? It shows the economy is running strongly and the RBA has finally caught up with the inflationary challenges that have arisen. McCrann argues that the RBA should have lifted rates last year. 3. Dark PictureWriting in Smart Company, the former CEO of the Council of Small Business, Peter Strong, focusses more on inflation than interest rates and describes how it is likely to effect SME’s (I have included the link below) It’s not a pretty picture he paints. He provides some likely future scenarios and some tips on how owners of small business can cope with rising inflation. 4. Don’t PanicHow will rising interest rates effect your share portfolio? There is no need to panic, AMP Economist, Dr Shane Oliver, tells The Motley Fool. He says rising rates from a low base are normally not initially bad for shares. It claims the early casualty is the RBA’s credibility and in that vein…. No.5 – A Stuff UpThe cash rate increase was the latest in a long line of stuff ups by the RBA and its governor Phillip Lowe, writes Sky News Business Editor Ross Greenwood, in The Australian.  Greenwood sinks the slipper into the RBA for suggesting Australia was immune from the inflationary forces afflicting other parts of the world and for encouraging Australians to believe that interest rates would remain low. It turns out to be bad news for young home buyers who borrowed large sums on the back of that advice. So, those are my top commentaries on inflation and rate rises from the past week. If you have others let us know in the interest of furthering our education. If you or a client requires cash flow and working capital support please let me know.

    December 21, 2023
  • Talking Points Ep 17 – Cheated | Fibbed | Spanked | Defamed

    What grabbed your attention in the world of finance this week? Here are my top talking points CheatedThe tax office is reported to be hunting crypto cheats. Apparently, somewhere between 500,000 and 1 million Australians have dabbled in crypto currency and a number aren’t declaring profits in their annual returns believing that the anonymity of the block chain extends into the real world. It doesn’t. The ATO is grabbing the records of crypto service providers to do some data matching. Miscreants who failed to declare crypto gains in their tax returns should expect a knock on the door FibbedA mortgage survey by financial services giant UBS revealed that in the second half of last year 55% of ANZ borrowers admitted lying in their loan applications.  It seems they were encouraged to do this, not by much maligned mortgage brokers, but by the banks own employees. PunishedJustice Beach of the Federal Court has confirmed that WestPac should pay fines totalling $113 million for failing to ensure its services were provided “honestly, fairly and efficiently”. This included charging fees to nearly 12,000 dead customers. Once again a member of the big four has been spanked by the courts for behaving badly. Westpac already holds the dubious honour of receiving a record fine of $1.3Bn for failing to report international money transfers some of which may have involved child exploitation CBA was fined $700 million because its ATM network could have been exploited by criminal drug syndicates NAB  was fined $70 million for charging for services never provided and for an unlicensed loan referral scheme. ANZ copped a $15 million bruise for, among other things. promoting a discount package to farmers that was never activated. Serious offences, some of which might put us lesser mortals in jail, yet I haven’t heard of any bankers behind bars. Leave a comment. DefamedThe Federal Court has awarded a Gold Coast doctor $450,000 because he was defamed by a competitor in a fake online review. The details, plus what to do if someone publishes a bad review of your business, can be found in this Smart Company article. That’s kept me entertained for the past week. What about you? And, if you or a client needs working capital check us out.

    December 21, 2023
  • Talking Points Ep 16 – “Grubby” Banks | Pay It Later Brawl, | Interest Rates

    What captured your interest in the world of business finance this week?  Here are my top three headlines. 1. “Grubby” Banks – with broker lobby groups hurling insults at main stream lenders. The Finance Brokers Association described some banks as grubby, ludicrous and narrow minded. It’s because lenders are playing hardball by offering discounted rates and cash backs to retain customers that brokers are trying to refinancing elsewhere. Brokers don’t like it but, at the end of the day, don’t customers deserve the best deal they can get? I am happy to hear your thoughts on that. 2. “See You Later” – Which could become a catch cry for AfterPay copy cat, Pay It Later whose directors are fighting. One of them has petitioned the federal court to dissolve the firm. Adding to that, some retailers who have subscribed to Pay It Later’s service complained to A Current Affair that they were not being paid at all. No.3. Interest Rates – While media hand wringing has largely focussed on mortgage rates rising mid-year, businesses owners will also experience pain. The cost of business loans will rise which will reduce spending power and also economic growth down the track. Amongst the mainstream lenders, it is likely to become harder to source funds without strong security. So, that’s what grabbed my attention this week. I have deliberately avoided the eye-glazing election campaign, but is there something you think I have missed? Leave a comment. If you or a client needs help with trade or invoice finance drop me a line.

    December 21, 2023

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