Category Archives: FINANCE & LOANS

Westpac refunds $65m to 200,000 customers over discount errors

Westpac is refunding $65 million to about 200,000 customers after it failed to pass on benefits they should have received under package deals offered by the bank.

The bank on Thursday said an internal review had detected problems whereby it failed to automatically pay consumers all the benefits they were entitled to under packages sold through Westpac, St George, BankSA and Bank of Melbourne.

“When we identified these issues, we started the process of putting things right for customers. We also notified ASIC [regulator the Australian Securities and Investments Commission],” Mr Frazis said in a statement.

“Westpac apologises unreservedly for a process that did not suit customers. By automating the discounts, we have ensured that our customers will not be affected in this way again.”

Under the packages, customers were meant to get discounts on products including home loans, credit cards and transaction accounts, but the bank said it had not given the discounts on “ancillary” products including home and contents insurance.

The chief executive of Westpac’s consumer bank, George Frazis, apologised and said all affected customers would receive refunds.

The refunds are expected to total $65 million, or $45 million after tax, and will be included in its upcoming full-year results.

The refunds being paid by Westpac are for customers who took out “Premier Advantage” or “Advantage” packages with the bank from 2010.

Earlier this month, Mr Frazis said Westpac would also scrap “outdated” rules that resulted in customers being charged fees if they made more than a certain number of transactions each month, and it put a $5 cap on personal account-keeping fees.

News of the refund comes as National Australia Bank and Commonwealth Bank will appear before the federal government’s banking inquiry on Friday, following last week’s questioning of Westpac chief executive Brian Hartzer and ANZ Bank chief Shayne Elliott.

Henry Sapiecha


Frustrated with forever being short of cash to grow your business yet you enjoy a good cash flow?

You want to buy a property & institutions turn you away?

Require some equipment or vehicles?

Have a project where you require capital?

Buying a house?

Your credit could be better?


Henry Sapiecha


Coming soon: mobile number instead of BSB, faster transfers

phone-icons image

Mobile phone numbers and internet addresses will replace bank account numbers and money will be transferred almost instantly between institutions, according to the RBA.


Henry Sapiecha

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commercial business loans info flyer (22)

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Henry Sapiecha

How to become your own venture capitalist in Australia

baloon money scope man image

Investing in a hot start-up before the initial public offering was once a privilege reserved for the wealthy and well-connected. Now times are changing, with crowdfunding platforms rapidly opening up the opportunity to everyone.

Take Sydney start-up ingogo, a taxi-booking app and mobile payment gateway founded in 2011 that’s challenging the near-monopoly of Cabcharge.

In February Macquarie Bank ranked ingogo third behind Cabcharge and GM Cabs, with about 11 per cent market share.

Founder Hamish Petrie has a track record of success, having founded ticketing provider Moshtix in 2002 and sold it to News Limited five years later. He claims ingogo is used by thousands of drivers and has processed “well over” $100 million of payments over the past 12 months.

When Petrie needed to raise capital for ingogo last year, he quickly garnered $7.9 million from the usual suspects in a round led by investment banks UBS and Canaccord Genuity and which included MYOB co-founders Brad Schofer, Craig Winkler and Chris Lee. But a whopping $1.2 million came from 52 individual investors who invested an average of $23,000 each through equity crowdfunding platform VentureCrowd.

“We didn’t expect anywhere near that much interest,” Petrie says. “We thought we might get a few hundred thousand dollars through crowdfunding, but we got $1.2 million in three days. If I think back to three years ago, [investment syndicate] Sydney Angels would not have been able to raise that amount of money in that amount of time, so that’s a great progression.”

One of the VentureCrowd investors, Jonathan Herrman, told Fairfax Media at the time it was the first time he had been “able to get access to a pre-IPO opportunity of the quality of ingogo”.

ingogo founder Hamish Petrie image

Ingogo founder Hamish Petrie says entrepreneurs can benefit from equity crowdfunding.Photo: Ben Rushton.

Investors who register with VentureCrowd can browse start-up investment opportunities and join a round with a minimum of $2500 per person.

The format on the VentureCrowd website is similar to the rewards-based crowdfunding projects available on the likes of Kickstarter, but the outcome is very different – participants are investors buying equity in the company rather than consumers forking over cash for the feel-good factor or in return for a reward.

The risks are high with this type of investment because most start-ups fail. For every 200 new ventures, only one will become a company large enough to exit via trade sale or IPO.

But the rewards can be great. Imagine being Alberto Chang-Rajii. In 1996, the Chilean was doing his MBA at Stanford and had scraped together $10,000 to buy a second-hand car. Instead he was persuaded to punt the money on 1 per cent equity in a little-known start-up called Google. His share today is worth an estimated $US3.74 billion ($4.86 billion).

Current Australian law means VentureCrowd is restricted to high-net-worth individuals who are registered as wholesale investors. But the federal government is expected to open up the opportunity to ordinary Australians within months.

If the reforms are passed as expected, effectively every Australian will be able to become their own venture capitalist – or more accurately, their own angel investor. Venture capitalists usually run funds with multiple investors, while angel investors are individuals who may invest alone or in syndicates and tend to invest at an earlier stage with smaller sums of money.

Australians investing overseas

telescope money baloon image

In the not too distant future, all investors will be able to sit at home trawling equity crowdfunding platforms online to find start-up investment opportunities around the world.

To a limited extent, it is already possible.

A number of countries (including New Zealand, Britain, Canada and Italy) have passed laws to allow equity crowdfunding for retail investors – and some of the foreign platforms allow Australians to participate.

Equitise launched last year with a New Zealand licence as an equity crowdfunding platform and has since bought business online community Rabble.

Equitise founder Chris Gilbert had initially planned to circumvent Australian laws by letting Australian retail investors buy equity in Australian start-ups via the New Zealand platform. He has since restricted it to wholesale investors for the time being.

“We probably could have gotten away with it, but we wanted to do things properly and for our image to be that way,” Gilbert says. “It’s such a fragile environment and if we’d gone in acting like cowboys, we could have completely wrecked it for all of us.”

Gilbert did not want to jeopardise the possibility of the government passing crowdfunding legislation later this year, or for Equitise to be given a licence under the new regime, given Australia is his ultimate market.

But he says there are other platforms around the world with no such qualms.

Gilbert is not qualified as a wholesale investor, yet he was able to make several investments in start-ups through UK platform Crowdcube when he was researching the market. He needed a UK bank account but it was otherwise very straightforward.

Gilbert says he believes New Zealand has struck a good balance with its protections for investors, and the required disclosures are better than in the UK.

“To prove you’re a willing investor [for Crowdcube], you had to answer 10 questions such as ‘do you think investing in start-ups is riskier than the sharemarket?’ – stuff that was so blindingly obvious that someone in year 10 could answer,” Gilbert says. “I don’t think it was strong enough.”

He also observed that Crowdcube tended to host more established companies with less of a technology flavour – many of the investment opportunities were bricks-and-mortar companies trying to expand.

Seedrs is another UK-based equity crowdfunding platform, but Gilbert found it was more difficult for an international investor to access, though he believes it would be possible if someone were determined.

Meanwhile, the United States, the first to pass laws to allow crowdfunding with the passage of the JOBS Act three years ago, has still not fully enabled it because the US Securities and Exchange Commission has delayed implementation. The SEC plans to release the final crowdfunding rules in October this year, making it unlikely it will be up and running before 2016.

Australian law

Soon it might also be possible for ordinary Australians – so-called retail investors – to invest in Australian start-ups. Federal Small Business Minister Bruce Billson is keen to open up equity crowdfunding to retail investors. He says he hopes to introduce legislation in the spring session of Parliament.

At the moment investing in start-ups – or any business outside the Australian Securities Exchange – is restricted.

Companies can raise up to $2 million from anyone as long as the number of investors is 20 or fewer. If the deal is done through the Australian Small Scale Offerings Board (ASSOB), the maximum raising is $5 million but it is still limited to 20 people.

Beyond that amount, equity investment is restricted to wholesale investors (also called sophisticated investors). This is defined as someone with net assets of $2.5 million and/or gross income of at least $250,000 a year for two consecutive years, and a certificate from an accountant to prove it.

Everyone else is a retail investor.

There are already a few equity crowdfunding platforms operating in Australia to cater for wholesale investors, including VentureCrowd and Israeli start-up OurCrowd.

A number of companies are waiting in the wings to offer equity crowdfunding to retail investors once the law changes, for example, Epplio, which would be a side business to rewards-based crowdfunding platform Pozible. Investor and entrepreneur Mark Carnegie has also stated he plans to offer a service.

Artesian Capital Management managing partner Jeremy Colless says his fund started VentureCrowd because it could see how technology would disrupt the venture capital industry.

He says crowdfunding means people can be their own angel investor. For most, it would involve a small percentage of investment assets, while people who were “massively interested” in the technology space might put 10 per cent of their assets into it.

“The ability of a crowdfunding platform is interesting because you can put $1000 into an individual start-up and over a period of three to five years, you could assign $20,000 across 20 start-ups,” Colless says. “That would give you a diversified portfolio and it would also give you vintage diversification as well, which is important in venture capital so you’re not all invested in one year because trends change and technology changes.”

Colless says this type of asset could become an important part of self-managed superannuation funds in the future, especially for 20-somethings who have a longer time to make up any losses.

Portfolio approach

But he emphasises a portfolio approach is essential because of the risky nature of early-stage start-up investment, with most new businesses likely to fail.

“In a start-up that has two people and an idea (maybe a prototype product but no customers and no revenue), you don’t have any data to know whether it’s going to succeed or not,” Colless says. “I’m not saying you can’t pick winners, but you have to wait until there’s data.”

Mick Liubinskas, entrepreneur-in-residence at Telstra’s accelerator program muru-D.image

Mick Liubinskas – founder of Pollenizer and multiple start-ups and entrepreneur-in-residence at Telstra’s start-up accelerator, muru-D – agrees. He points out that successful investment is all about learning from failure and that is only possible with a spread of investments rather than putting all your money into a single company.

He says investors need to be ready for follow-on rounds – and to make sure they will have the right to participate in future funding rounds.

“You have to expect multiple rounds of investment and of increasing sizes,” Liubinskas says. “You have to take part or you’ll be diluted and wind up only owning 0.1 per cent of the company.”

So rather than putting $250,000 into one investment, you might invest $5000 in 10 start-ups, then $25,000 in four of those start-ups in the second round and then a final $100,000 into the most successful one.

With each round, Darwinian theory culls a few start-ups, others don’t need to raise additional capital and a few will have traction that should be visible to an engaged investor.

“It’s like betting on a horse race and being able to add to your bets after the race has started,” Liubinskas says. “You want to end up with a 10-times return on investment in aggregate but that will come from one of them being 100 times.”

While engagement may not translate to a seat on the board, Liubinskas says investors should demand to at least be on a mailing list and receive regular updates.

He also suggests investors try to add value to an investment – not just with cash, but with knowledge and connections.

For example, budding angel investors could approach a start-up co-working space such as Fishburners and offer to donate a few hours of their specialist professional skills to anyone who needs it.

“You can use that as your due diligence to see which companies want your help and at least you’ll know you’re adding value and you’re not dumb money,” Liubinskas says.


Liubinskas says inexperienced investors often blow their dough when investing in technology start-ups without specialist knowledge. For example, former cricketer Ian Healy lost a bundle of cash investing in 131 during the first dotcom crash.

Clive Mayhew made his money as a technology entrepreneur and now mainly invests in the tech sector.image

Clive Mayhew made his money as a technology entrepreneur and now mainly invests in the tech sector.

Technology entrepreneur Clive Mayhew – who has made several investments, mostly in technology start-ups such as education software company OpenLearning – says his top tip is to work within syndicates.

“I’m in the [early-stage investment] Sydney Seed Fund and because I’ve got deeper pockets and know the education sector, I go out and invest individually as well,” Mayhew says. “But most people without a deep knowledge of the sector would find it difficult. Join a group of people who have a level of expertise and trust those people and work with them.”

For those investors wanting to go it alone, Mayhew advises they either stick to a sector they know or take the time to research the sector thoroughly.

The syndicate approach has pertinence to crowdfunding, since some platforms handpick their investment opportunities and others are neutral hosts open to anyone.

Both VentureCrowd and OurCrowd have an extensive selection process. VentureCrowd works with angel groups and incubators to pre-qualify the start-ups they put on the platform.

The other thing that varies among crowdfunding platforms and the laws in different countries is the rights of shareholders. For platforms such as VentureCrowd, the platform holds the voting rights and runs the investor management to keep the administrative burden manageable for the start-up. Historically, many angel groups set up unit trust structures to aggregate many angels into one shareholder for the same reason.

But under some models, each crowdfunding contributor is an individual shareholder with full rights.

For ingogo’s Petrie, the VentureCrowd model meant he could enjoy the benefit of a larger pool of investors without extra hassle. He says it is very helpful to have VentureCrowd manage the investor relations so his team can focus building the business.

“Taking money from VentureCrowd was partly because of interest to support a new method of fundraising and see what was possible. Personally, I think it’s a great way to give more power in the fundraising process to the founders, rather than limiting your funding sources, ensuring you get a fairer valuation on the business,” Petrie says.

“It was also strategic, in that we knew we would have a larger pool of investors and their combined networks out supporting and talking about our business, making connections for us, and as we move towards an IPO, we would have a naturally larger base behind the company.”

Petrie says venture capital in Australia was “a completely different world” when he started in business, but entrepreneurs without a successful track record will still reach a point when it becomes difficult to raise capital.

For that reason, he would be keen to see equity crowdfunding opened up to retail investors, with appropriate safeguards in place.

“As the government gets comfortable with crowdfunding, it will open it up to more than just sophisticated investors. Every year we spend $20 billion on gambling and an incredible amount of money on one horse race a year, but we won’t let people take a bet on a high-risk, early-stage, innovating company through a crowdfunding platform – it doesn’t make sense,” Petrie says. “Equity crowdfunding is coming and it’s going to make the start-up space even more exciting.”


Renata Cooper is developing a start-up portfolio as an angel investor.image

Renata Cooper arrived in Australia as a refugee from Slovakia when she was 19 with just $20 to her name. Nearly 30 years later, she is a multimillionaire and building a name as an angel investor.

Cooper is behind entrepreneurial networking community Forming Circles, which she sees as a “brand of influence” backed by her money, funding projects with social impact alongside her actual investments.

Her biggest investment is $1.5 million in Ivvy, a Queensland cloud software provider to help event organisers and venues, founded by Lauren Hall.

“I was only going to invest $100,000 but I was so impressed by Lauren’s presentation, who she was, what her technology was and the potential for disruption in the events industry,” Cooper says.

Cooper invests mainly in women, both because she has found their pitches more impressive and also because she wants to create social change by giving opportunities to women. She observes that it balances out since her husband, Tim Cooper, is also investing in start-ups and has backed mostly male founders.

The Coopers made their money from technology company SMARTS Group International, a sharemarket surveillance tool that was eventually acquired by Nasdaq for an undisclosed sum.

“I was never brought in formally, but I witnessed the journey from conception to exit,” Cooper says. “I’ve seen what works and I understand it’s not overnight that you’ll be multimillionaires.”

Cooper did work at another of the family’s start-ups, Edval, which makes software for school timetabling, but left to focus on her young family and then to create Forming Circles.

Most of Cooper’s investments have been as an individual under her Forming Circles banner, but she is also a believer in investment syndicates. Last year she joined Scale Investors, an angel network focused on female entrepreneurs. Cooper led Scale’s seed funding round in CloudPeeps, an invitation-only marketplace connecting businesses and social media professionals, with a $100,000 investment.

More recently, she provided $25,000 to entrepreneur Fred Kimel for his start-up Handkrafted, a marketplace for commissioning handcrafted goods, after reading a profile of his business in BRW .

Cooper is looking for more start-ups like Ivvy – she would like to form a portfolio of three or four start-ups and then grow to 10 over time – and says she would definitely try investing via an equity crowdfunding platform.

She is for opening up equity crowdfunding to retail investors because the Australian economy needs more entry and mid-level investors supporting the growth of small and medium businesses that create jobs. But she says it should only be done with a lot of caution, including education about the risks and support for investors.

“Angel investing is one of the highest-risk investments you can make and I do it because I love it,” Cooper says. “I trade shares on the sharemarket too and we do have a conservative super fund, so we’ve protected our future, but this is play money.”


When people talk about crowdfunding, they usually mean rewards-based crowdfunding of the kind offered by the likes of Kickstarter, IndieGoGo, Pozible, Start Some Good and Pledge Music.

The concept, which emerged about 2008, is that creators can seek advance funding for a project such as a film. Anyone can create a project and anyone can support it.

The project creator usually offers incentives in exchange for financial support, and most crowdfunding platforms specifically encourage a tiered rewards structure – for example, a filmmaker might offer a thank-you card for a fiver or dinner with the lead actor for $1000.

These days, many start-up companies use crowdfunding to help them market themselves to a wider audience and the rewards structure is effectively a pre-sales channel that reduces risk for the entrepreneur.

For example, Queensland-based Dillenger recently raised more than $200,000 on Kickstarter from more than 400 backers. The rewards were the company’s product – affordable electric bicycles.

With a Kickstarter project, people would put in money in exchange for a reward, or simply to feel good about supporting the project. This is very different to equity crowdfunding, where the contributors are actual investors buying equity in a company.

Rewards-based crowdfunding is perfectly legal, as long as the products are legal and there is no fraud, while equity crowdfunding is regulated as an investment product.


Diversify: invest across a number of start-ups, not only to give you a diversified portfolio, but go for “vintage” diversity as well, meaning you’re spreading your risk across different time periods to protect against changing trends and technology.

Pool resources: working in a syndicate gives you access to other investors with expertise in particular areas.

Home ground: if you’re investing alone, stick to a sector you know – or research it thoroughly.

Follow-on rounds: be prepared to do follow-on investments of increasing amounts for the start-ups that survive.

Engagement: expect regular updates, whether directly from the start-up or via the crowdfunding platform.

Add value: offer your own professional skills to start-ups, both as due diligence before an investment and as a way to remain engaged and add value afterwards.


Henry Sapiecha

ASIC’s advice register will help to weed out bad apples in the finance adviser business

Stopping the rot: The register of financial advisers will only be as good as employers' breach reporting and recruitment processes.

Stopping the rot: The register of financial advisers will only be as good as employers’ breach reporting and recruitment processes.

The Australian Securities and Investments Commission’s register of financial advisers that went live this week provides details of all those licensed to provide advice on investments, superannuation and life insurance.

The register on ASIC’s MoneySmart website at includes the adviser’s name, registration number, the adviser’s licensee and employment history going back five years.

It shows who owns the financial services licence, including the ultimate owner of the company under which the adviser is licensed. It also shows what products they can advise on.

It also shows disqualifications, banning orders or enforceable undertakings.

It looks as if the register has scored some early wins for consumers with four planners adversely named in the financial planning scandals at the big banks not listed on the register.

These are the planners who were “moved on” from employment with the big banks but who had not necessarily been reported to the regulator and who presumably had gone on to work for other employers.

The absence of the names on the register means that they are no longer working as financial planners.

It is an early indication that the register is working as intended with planners with questionable backgrounds leaving the industry.

A lack of quality control in the financial advice industry and a culture of financial product sales have long left consumers vulnerable to shoddy advice.

The licensing regime requires employers, the license holders, to supervise their planners and ensure their planners are honest, competent and ethical.

But as the scandals at the advice arms of the some of the banks have shown, employers have not been supervising their advisers as closely as they should have been.

The register is a good starting point. But there are plenty of things that the register does not include, such as police checks on planners and whether the planner has ever been bankrupt. And the employment history goes back five years only.

While the majority of planners are professional, there is a small percentage of “bad apples” who continue to move from employer to employer.

The register is really about ridding the industry of these bad apples.

But the register will only be as good as employers’ breach reporting and recruitment processes.

Employers are required to make “breach” reports to the regulator when they find problem with an employee planner that has resulted in, or is likely to result in, “significant” financial losses to clients.

The temptation of employers is to have the bad apples move to another employer with as little fuss as possible.

There are advisers who have done the wrong thing by their clients and been “moved on” and are still working as advisers with other employers.

Yet, they will not have any black marks against their names on the register.

Some employers may value a prospective employee’s ability to sell financial products above other skills. If a candidate has a record of success in sales, problems with their previous employment may be over-looked or minimised.

It is important to understand that there is no guarantee the information on the register is correct.


Henry Sapiecha

Investor Group to Buy GE Capital’s Australia, New Zealand Consumer-Lending Unit

Jeff Immelt

Jeffrey Immelt, chairman and chief executive of General Electric. Mr. Immelt has said he aims to reduce GE Capital’s share of the broader company’s profit.

SYDNEY, Australia—In one of the biggest deals in the Asia-Pacific region so far this year, General Electric Co. agreed to sell the consumer-lending business of GE Capital in Australia and New Zealand to an investor group including KKR & Co. and Deutsche Bank AG. The pact has an enterprise value, including debt, of about 8.2 billion Australian dollars (US$6.26 billion).

GE continues to shed consumer finance businesses around the world, part of an effort to reduce its presence in banking amid investor pressure to focus on industrial operations like making jet engines, power turbines and CT scanners.

The conglomerate has exited or pared back its exposure to consumer businesses in Japan, Turkey, the Nordic region, Eastern Europe and the U.K. in the years since the financial crisis. Last year, it took its biggest step yet to slim down GE Capital by selling shares in its private-label credit-card and retail-payment plan business in North America, part of a plan to spin it off entirely this year.

The moves have helped shrink GE Capital and make it less risky. But the unit would still rank as the seventh largest U.S. bank, and investors want GE to go further. The Wall Street Journal reported last week that GE, in an acknowledgment of those concerns, was considering making bigger cuts to its banking business, including to its much touted business of lending to midsize U.S. companies, according to people familiar with the matter.

GE Capital’s consumer-finance business in Australia and New Zealand has more than three million customers. It provides personal loans and credit cards, as well as interest-free financing for products sold by local retail partners including housewares and electrical-goods retailer Harvey Norman.

GE Capital will keep its commercial finance unit, which provides loans and leasing to midsize businesses in Australia and New Zealand.

The investor group that is buying the operations also includes $10 billion alternative-investment firm Värde Partners, which has offices in Minneapolis, London and Singapore.

In landing the deal, the KKR, Deutsche Bank group bested several other suitors, according to a person familiar with the matter, including three separate groups involving TPG, Apollo Global Management LLC and Macquarie Group Ltd.

GE’s finance business nearly toppled the company during the worst of the global financial crisis. Since then, GE has scaled back its finance arm, selling off billions of dollars of assets. Yet the company’s stock remains stuck below $30 and the company has underperformed some of its industrial peers that don’t have big lending operations.

At an investor conference in February, GE Chief Financial Officer Jeffrey Bornstein said investors remain concerned about the size and returns of the lending business, and how new bank regulations affect the business’s ability to generate returns.

“We will continue to look at the balance of the portfolio,” Mr. Bornstein said. “A lot of this is going to play out in the next couple of years. We’re focused on being small.”

GE’s chief executive, Jeffrey Immelt, has said he aims to reduce GE Capital’s share of the broader company’s profit to 25% in 2016 from 42% last year and more than 50% before the financial crisis.

At the end of last year, GE agreed to sell its consumer finance Budapest Bank to Hungary’s government and it completed the sale of its consumer finance business in Sweden, Denmark and Norway to Spanish lender Santander. A year earlier, it sold its 69% stake in Swiss consumer finance bank, Cembra Money Bank AG, to the public through an IPO.

GE, meanwhile, is still interested in businesses that play to its industrial strengths and in January, it bought helicopter-leasing concern, Milestone Aviation Group, for about $1.8 billion.

Elsewhere in Asia, GE has been in talks to sell stakes likely valued at more than $1 billion in its South Korean auto-financing and credit-card businesses, people familiar with the situation told The Wall Street Journal in October. The sale would unwind a partnership that began 10 years ago between GE and Hyundai Motor Co, one of South Korea’s largest companies.

—Gillian Tan contributed to this article.

Write to Rebecca Thurlow at


Henry Sapiecha


Business loans via paypal unfortunately are heavily concentrated on businesses with a high level of credit card usage in the business. See our earlier business finance options that would be better suited to most borrowers.

Henry Sapiecha