TPG slammed by ACCC for misleading conduct, RBA to help banks prepare for new Basel III regulations: Economy Roundup

Telco giant TPG has been taken to Federal Court by the Australian Competition and Consumer Commission, which alleges that the company used misleading advertising lure in customers.

According to a statement from the regulator, TPG advertisements promoting a $29.99 unlimited ADSL2+ plan were false and misleading, because they represented users could buy those services for $29.99 per month.

“In fact these services are only available when purchased together with home phone line rental from TPG at an additional cost of $30 per month, meaning that the minimum monthly charge payable is $59.99 not $29.99.”

The ACCC also says TPG advertisements do not disclose start-up charges, including a $129.95 set-up fee.

“The ACCC is seeking declarations that TPG contravened the Act, injunctions (including interlocutory injunctions), pecuniary penalties, corrective advertising and costs.”

The Reserve Bank of Australia and the Australian Prudential Regulation Authority will create a new system which will allow banks to borrow money in case of emergencies, as part of the Basel financial reforms which are being implemented in a number of G20 nations.

The RBA will also provide loans to cover any shortfall between liquid assets and new liquidity requirements, while banking institutions will now put up collateral for the new facility.

Treasurer Wayne Swan responded, saying that banks should not be able to use these changes in order to charges customers with excessive fees.

“We’ve worked hard to ensure that we can apply these global standards in Australia so that they are entirely appropriate for our unique domestic circumstances, which is a great result for all Australian families and small businesses,” Swan said in a statement.

“Our global peers recognise there is simply not enough Australian government debt for our banks to meet the liquidity standards as originally drafted and therefore developed rules to allow us to fully comply.”

Swan also pointed out that the reforms will not come into effect until 2015 and that no bank “will be able to cite them as justification for stinging customers with any additional costs”.

“On the contrary, our work at the G20 will improve stability in the global financial system, which will benefit all Australians.”

The Basel Committee has also announced that low-debt countries including Australia will have slightly more room to move in adhering to the new rules.

“If you fall within that threshold, then there would be alternatives that could be used,” Stefan Walter, Basel Committee secretary-general, told Reuters.

James Hardie Industries has lost an appeal against the Australian Securities and Investments Commission for saying the company had enough funds to cover asbestos claims. Chief Justice James Spiegelman said in his judgement the court’s original judgement should stand.

“The court has concluded that no error has been shown in the judge’s findings of contravention,” the judgement said.

Meanwhile, ANZ chairman John Morschel warned the economic recovery will be volatile in Australia as Europe and the United States work through debt issues.

“Although the eurozone seems set to survive, confidence in the EU as a political union continues to erode, and… European banks will need to continue to shore up their balance sheets,” Morschel said in a statement.

“Australia is expected to continue to perform well and in New Zealand the recovery is gathering momentum,” he added. “But with the global economic growth likely to be soft over the medium term, the environment will remain challenging to navigate.”

Shares low despite strong Wall Street lead

The Australian sharemarket has opened lower this morning despite a strong Wall Street lead, pushed off by a strong profit forecast from FedEx.

The benchmark S&P/ASX200 index was down six points or 0.14% to 4777.2 at 12.10 AEST, while the Australian dollar moved higher to US99c.

AMP rose 0.6% to $5.35, as Commonwealth Bank shares rose 0.2% to $51.06. ANZ dropped 0.3% to $23.68 as Westpac rose 0.3% to $23.21.

Lend Lease has said it is currently in talks to acquire the local unit of German construction group Bilfinger Berger.

“No agreement has been reached,” Lend Lease said in a statement.

The Australian has reported that Lend Lease is currently in talks with the company, and that it expects to fund the transaction with existing cash and debt facilities.

Village Roadshow has said it will sell off Sydney Attractions to European group Merlin Entertainments Group in a deal worth about $115 million.

“This transaction also includes an understanding to consider developing brands such as in partnership in Australia,” Village Roadshow’s chief executive Graham Burke said in a statement.

“This is an important step for Merlin, significantly strengthening our presence in the dynamic Asia Pacific region and bringing our strong international brands to another set of iconic established tourist attractions,” Merlin’s chief executive Nick Varney added. “The deal means that in Sydney… we will have a cluster of leading visitor attractions to match our strength in the London and Berlin markets.

US jobless data improves

Investors in the United States have been given a boost in confidence after initial claims for jobless benefits fell last week, according to the latest data from the Labor Department. The four-week moving average of claims dropped for a sixth consecutive week to a two-year low.

And in a separate report, the Philadelphia Reserve Bank said its business activity index rose to 24.3 – the highest point since April 2005.

On Wall Street, the Dow Jones Industrial Average gained 41.78 points or 0.36% to 11,499.25.


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