ANZ to Compensate 200,000 Customers

One of Australia’s biggest lenders， ANZ， is paying out compensation to 200，000 customers totalling AU$13 million.

The move comes after the bank failed to apply correct interest payments to some accounts for several years.

The lender said that it had received a complaint about the issue in 2013 and that the error dated back to 2007.

ANZ said a system error was to blame and that it was resolving the problem and had apologised to customers.

“There was an issue where some customers were either underpaid or overpaid the correct amount of bonus interest on their progress saver account，” said Emily Kinnear， ANZ’s media spokesperson.

But Ms Kinnear said the bank would not recoup the amounts that were overpaid.

The bank said the issue had affected 0.5% of saving accounts each month and that the majority of refunds were for amounts of AU$35. About 100，000 customers were owed less than AU$5.

Ms Kinnear said a thorough review had been conducted and reimbursements should be completed this week.

Australia’s banking watchdog， the Australian Securities and Investment Commission （ASIC）， said the lender had reported the matter to the regulator.

It said ANZ had taken its breach reporting obligations seriously and that the refund payment included an additional amount “to recognize the time elapsed since the initial breach”.

“Breach reporting helps ASIC ensure affected consumers are returned to the position they would have held if it were not for the breach occurring at all，”ASIC’s deputy chairman Peter Kell said.

Earlier this year， ANZ won an appeal against a landmark court ruling that some of its fees for late payments were unfair.

One of the largest in the country， the class action suit began in 2010 and involved some 43，500 customers.

In October， the lender posted a record annual cash profit of AU$7.2bn. The result for the year to September marked a 1% rise on cash profits from a year earlier.

OECD Lowers Australian Growth Forecast as China Slowdown Bites

The Organization for Economic Co-operation and Development （OECD） has lowered its forecasts for Australia’s economic growth for 2016.

The latest OECD economic outlook predicts the Australian economy will expand by 2.6% next year instead of the 3% previously predicted.

Worldwide， the OECD says global growth weakened to about 2.9% in 2015.

It reduced its forecast for the world economy to 3.3% for 2016， down from its September prediction of 3.6%.

OECD secretary general Angel Gurria said slowdowns in China and other developing countries were hurting the global economy.

“Global growth prospects have dimmed again. Since the crisis we have become used to a familiar pattern， springtime optimism followed by downgrades in growth forecasts as the year progresses，” he said.

“Unfortunately 2015 is not different.”

The OECD said it expected Australia’s economy to pick up in 2017 to a growth rate of 3%.

It predicted the Chinese economy would slow to 6.8% in 2015 and 6.2% in 2017， as the economy shifted away from exports and towards household consumption and services.

The OECD said China faced “significant challenges” as it changed its economy while avoiding a sharp fall in economic growth.

Australia’s Property Market Still a Draw for Foreign Investors

High property prices in Australia are failing to deter overseas investors， including those from China and Hong Kong，despite the country’s central bank holding interest rates at record lows.

It comes as the country’s traditionally high commodity revenues continue to remain low， leaving consumer durable stocks in large homeware chains to drive the country’s stock market.

Last week the Reserve Bank of Australia kept interest rates stable at 2% for the seventh month in a row， despite indications the Australian economy could be strengthening.

Australia’s central bank has cut rates 10 times since November 2011， with the last cut in May 2015.

Partly due to the low interest rates， property prices in major Australian cities Sydney and Melbourne have been rising steadily since 2011.

An unprecedented number of international investors， particularly from China， have also led the boom， with ANZ now estimating about one in five home buyers is from outside Australia.

Commonwealth Bank chief economist Craig James said Australia’s interest rates would stay low for the foreseeable future， either stable or slightly below 2%.

“The Reserve Bank believes the Australian economy has picked up and they’ve got a positive outlook，” he said.

James said the numbers would keep the Australian dollar between 70 and 72 cents to the US dollar for the rest of the month， although it was expected to drop if the US Federal Reserve raises its interest rates in December. “If they do start lifting interest rates we’ll see the Aussie dollar easing against the greenback，” he said.

All these conditions haven’t done anything to stop foreign investor interest in the Australian real estate market. “One in five sales in the market were from foreigners [earlier this year] which is an extraordinarily high rate，” ANZ chief economist Warren Hogan said.

Hogan said while the property market was beginning to soften in Sydney and Melbourne， other major Australian cities and outlying areas were now seeing interest from foreign investors.

“Both domestic and international investors， they’re continuing looking for value in the next tier of cities， in Brisbane， Adelaide， Perth，” he said.

“I think you’ll even see activity in regional centers - a great example would be places like Cairns which has been very soft for the past 10 years.”

James said while mining and commodity stocks were down as international prices remained low， domestic consumer stocks were performing strongly.

“I think a continuation of low interest rates will be good for the consumer durable area， including realtors like Harvey Norman，” he said.

“Consumers will be more willing to spend rather than leave their money in the bank particularly if activity in the housing market continues strong.”

Australia’s Property Investor Lending Suffers Largest Fall in 7 Years

The campaign by financial regulators to take the heat out of property investment appears to be working， with investor mortgages tumbling by 8.5%， the largest fall in seven years.

Despite a better than expected rise in financing for owner-occupied dwellings ― up 3% in September ― the rapidly cooling investor market saw the total value of housing finance slip 1.6%.

The number of owner occupied housing approvals rose by 2%， ahead of the market’s expectation of a flat result.

However， that result was tempered by the August figures suffering a significant downgrading from 2.9% growth to 1.9%.

The results came with a caveat from the Australian Bureau of Statistics， which noted the move by some of the major banks to reclassify investor loans to owner-occupier.

Reserve Bank deputy governor Philip Lowe last week also questioned the quality of data the banks were supplying and noted that collectively， they had understated investor lending by 10% of AU$50 billion in the last quarter.

Banks’ reporting failures leave RBA in an awkward position

RBC Capital Markets strategist Michael Turner said while the figures suggest continued moderation in investor activity ― partially offset by owner occupier activity ― housing finance and credit data have become increasingly difficult to interpret.

“Data from lenders has been revised to show a much higher level of investor credit outstanding， and borrowers now have an incentive to report loans as owner occupier given the relative increase in rates charged for investor lending，” Mr Turner said.

JP Morgan’s Ben Jarman said the banks’ reporting failures have made it hard to assess the degree of risk that has built up in the system.

“Measurement issues lead us to the conclusion that the underlying swing in the composition of new lending is probably less pronounced than the data suggest， while the slowdown in overall lend-ing activity probably is greater，” he said.

“This leaves the RBA in an awkward position of having a housing problem that was larger than appreciated， while being uncertain as to the ‘true’ degree of slowing and composition changes in activity underway now.”

However， the Commonwealth Bank’s Gareth Aird noted there was now plenty of evidence that indicates measures introduced to slow investor related lending are having an impact.

“In addition， a slow decline in rental yields due to strong dwelling price appreciation is acting as a natural restraint on lending growth to investors，” he said.

“We expect this trend to continue over coming months in line with cooling auction clearance rates.”

The banks have been under pressure from the Australian Prudential Regulatory Authority and the Reserve Bank to abide by a 10% per year “speed limit” on property loan growth.

In response， banks have raised interest rates charges to investors， toughened loan serviceability tests and wound back interest-only loans to the sector.

NSW and Victoria still strong， first home buyers struggling

New South Wales still has the strongest pipeline of residential construction， with the number of approvals up 20.4% year-on-year， followed by Victoria up 10.1% and South Australia 8.7%.

The number of approvals has fallen over the year in Queensland， Western Australia and Tasmania.

Loans to first home buyers rose by 6.2% in September， but at just 15.4% of all dwellings financed remains close to record lows.

RBC’s Michael Turner said the figures reinforces the view that residential construction is likely to peak next year in response to slowing demand for housing assets.

Agency Fired over Failed Australia Taxi Twitter Campaign

Australia’s Victorian Taxi Association （VTA） has fired its social media agency Yourtaxis after a campaign aimed at fixing the ailing taxi industry backfired.

On November 9， the agency asked for positive taxi stories on the Twitter， but this drew a slew of serious complaints such as attempted sexual assault by drivers.

On Remembrance Day it was accused of poor taste for misspelt tweets linking veterans taking taxis to its campaign. VTA said it would rethink its strategy after it was mocked online.

“Unfortunately， the YourTaxis campaign concept and its delivery did not match our intention，” VTA said in a statement.

“We were aware of many of the issues that passengers face but the campaign concept and delivery showed us the true extent of their concerns.

“We take full responsibility for the campaign and will be undertaking a full review of our strategy.”

On November 11， the agency tweeted： “Rememberance Day 600，000 taxi trips are taken by war Veterans and widows for treatment purposes. Lest We Forget”.

It was later taken down and then followed by an apology tweet， again misspelling Remembrance Day.

The social media slip-ups cap off what has been a difficult year for the taxi industry in Australia， which has been plagued by the rise in popularity of ride sharing companies such as Uber.

But the city of Melbourne has faced particular publicity battles last month， including allegations an Aboriginal actor was refused service ， and claims Border Force officers were to carry out checks at Melbourne taxi ranks.

According to the new Your Taxis website “the Victorian taxi industry is a key contributor to the state’s economy with over 30，000 accredited drivers generating AU$275 million in taxes， 820 million in fare revenue.”