Ahmed Fahour fears backlash against lenders post-Hayne

Ahmed Fahour has pleaded with regulators and the federal government to not ‘use a sledgehammer to hit a nail’.

Ahmed Fahour: ‘We are already starting to see signs of credit tightening.’ Picture: David Geraghty

Ahmed Fahour, one of the ­nation’s most senior finance executives, has pleaded with regulators and the federal government to not “use a sledgehammer to hit a nail” in any crackdown on the sector in the wake of the Hayne royal commission.

Mr Fahour, recently named chief executive of Latitude Financial Services, acknowledged that the bad behaviour of the banks and other financial groups deserved a tough response, but he was worried that “smashing these big and important institutions” would have unintended consequences for the economy.

“Let’s have a balanced, thoughtful approach to how we address this. The crimes and the behaviour of a few is going to cause everyone to suffer,’’ Mr Fahour told The Weekend Australian as he revealed his plans for a restructure of Latitude, which is set to be a big beneficiary of the royal commission in consumer lending as the banks pull back on lending.

Running the non-bank lender, which is backed by Deutsche Bank and US private equity giants KKR and Varde Partners after they bought the business from GE Capital in March 2015, is the third local senior executive role of Mr Fahour’s career, after five years as the boss of NAB’s Australian operations and seven years running Australia Post.

The legacy of his former employer, from whom he resigned in February last year amid a furore over his salary, will haunt him next week when he is due to appear in the Federal Court in Melbourne in an Australia Post unfair dismissal case.

The 52-year-old former management consultant also remains chairman of embattled packaging company Pro-Pac, backed by his friend, billionaire Raphael ­Geminder, and which last month lost its CEO, Grant Harrod, following a shock profit downgrade.

Mr Fahour, who has been running Latitude for only 60 days after taking over in October, now wants to accelerate its double-digit growth and make it a greater facilitator of e-commerce trans­actions, especially in retail.

But he is worried about the broader financial sector being punished for the sins of a few in the wake of the royal commission.

When he was at NAB he was a proponent of vertical integrating the bank’s wealth management and transactional banking services, which are now being ­unwound across the sector due to scandals and conflicts of interest.

“Society seems to have lost ­respect for these institutions because they have violated trust. Something needs to be done about that,’’ Mr Fahour said.

“But what I have been cautioning people about is you don’t want to use a sledgehammer to hit a nail. Do the changes to stop these gross violations of behaviour and trust but don’t throw the baby out with the bath water.”

Mr Fahour said he hoped there would not be an over-the-top regulatory response to the final Hayne commission report, which is due in February.

The interim report in September highlighted the need for a stronger and more proactive ­enforcement of existing laws and regulations.

“I find it hard to believe those in power won’t be sensible about this … I hope they will have the appropriate response, not an inappropriate response,’’ he said.

The flow of credit to consumers and small businesses is now becoming more constrained after the royal commission as banks make more stringent assessments of credit applications, including more thorough analyses of customers’ income, living expenses, assets and liabilities.

The banks are also extending this approach to mortgages, which has doubled the time it takes to get a home loan.

This week’s Export Barometer released by global logistics giant DHL found some exporters were also struggling to obtain trade ­finance as the tighter lending rules took hold. Exporters also said the cost of finance had increased over the past 12 months.

Mr Fahour said he was deeply concerned about credit rationing across the economy.

“It worries me a lot,’’ he said. “We are already starting to see signs of credit tightening. It was hard enough for small business to get a loan … It is really important that where some have stresses and strains, we don’t throw out the 98 per cent that don’t have stresses and strains.’’

He reiterated that Latitude would try to help with cash-flow lending where it could.

“This is an opportunity for us to either partner with other institutions or we can go direct,” he said.

“We will step up to the extent we can.’’

Mr Fahour revealed to his staff yesterday that he would be re­structuring Latitude to become a data and technology-driven business focused on growing the online operations of its customers, which would morph into what he called a “neobank” in the long term.

“I want us to stop thinking about our business in a traditional financial services sense,’’ he said.

“In the future we will be a technology and digital-driven firm that is branchless.’’

He said Latitude’s new operating model would be built around three streams of activity: sales and customer; portfolio management; and administration. The latter will include finance, risk and governance and corporate services.

“We were organised on very traditional grounds and not actually taking advantage of the ­superb platform and position of using our data and tech to compete in this digitally enabled world,’’ he said.

The company has hired ­Andrew Walduck, who worked with Mr Fahour at Australia Post, to be the executive general manager of digital and technology.

“Andrew will bring together all of these bits and pieces to take advantage of the fact that we are a fintech with a real business as ­opposed to a start-up,’’ Mr Fahour said.

Latitude last week purchased New Zealand e-commerce payment company GenoaPay, which offers a payment solution for small-scale payments of up to $1000, with no interest or fees for the consumer.

GenoaPay pays the business with the money up front and the consumer pays GenoaPay over 10 weekly instalments.

“What we are now doing is empowering our retail customers with their digital strategies,’’ Mr Fahour said.

“We want to go for online growth.”

Another key hiring by Mr Fahour is former Australian Post executive Chris Blake, who will be Latitude’s executive general manager, corporate services.

Rachel Cobb will take on the role of leading Latitude’s key growth verticals operation in the business to business space in Australia and Paul Varro has been ­elevated to the position of executive general manager, product.

The firm’s executive committee will be made up of Mr Varro, Australia EGM Greg White, New Zealand EGM David Gelbak and chief financial officer Adrienne Duarte.