Day 478: 'Without proper board representation'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 478.
Today in summary: Bank boards have been advised to appoint "social risk officers", Insurance companies say the recent surge in self-reported breaches of their code is due to improved systems — not Hayne; AMP chair David Murray is this week meeting with key stakeholders to avoid a vote against him at the wealth giant’s AGM; and the embattled Aboriginal Community Benefit Fund has risen from Hayne’s ashes and is working with regulators to make better products.
-- Alex
@AlexESampson
Current banker panic level: 🤓 😇🤑
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Bank boards have been advised to appoint “social risk officers” in a report from the Actuaries Institute. The report, released today and reported in the Australian Financial Review, said these officers would help directors address a growing list of non-financial risks in managing relationships with customers, regulators and employees following the Hayne royal commission.
Insurance companies have said the recent surge in self-reported breaches of the general insurance code was due to improved systems, not the Hayne royal commission. This comes after the General Insurance Code Governance Committee, which monitors the industry's voluntary code, yesterday revealed an uptick in the number of breaches reported by insurance companies in the past nine months.
The Australian is reporting that AMP chair David Murray is this week meeting with institutional investors and other key stakeholders to battle plans to vote against him at the wealth giant’s AGM on May 2.
AMP is hoping to avoid a second strike against the group’s remuneration report, which was last year voted down by investors. Another strike this year could lead to a spill of the board under the “two-strikes rule”. APRA chairman Wayne Byres told bank boards last month that executive pay could no longer be driven by shareholder returns.
This comes after former APRA supervisor Fahmi Hosain said told delegates at the AFR Banking and Wealth Summit two weeks ago that the two strikes rule was giving shareholders too much power over the remuneration structure of listed companies. Hosain called on government to abolish the controversial rule and his stance was backed by Deloitte partner Karen Den-Toll.
A funeral insurer that came under fire during the banking royal commission for potentially misleading Aboriginal and Torres Strait Islander customers has risen from the ashes and recruited former Aboriginal NRL star Jamal Idris as an ambassador.
The Aboriginal Community Benefit Fund, which was criticised by Hayne for its predatory products and sales tactics which exploited the cultural significance of funerals to Aboriginal communities, has rebranded as Youpla, and is co-owned by Idris's brother Isaac Simon. Simon said Youpla was working with regulators to develop better products.
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Today’s burn prize: Merlon Capital Partners principal Hamish Carlisle
“AMP will apparently have A$1.415 bn of its shareholders’ funds invested in a company without proper board representation and in a Bermudan structure stacked with management and performance fees. If this is not a conflicted situation, I don’t know what is.”
Carlisle told The Australian he disagreed with AMP’s decision to retain board member Trevor Matthews as a nominee on the AMP Life board upon the sale of its life insurance arm to Resolution Life — a firm that specialises in buying insurers undergoing restructures — saying the move would be too great a conflict. Carlisle has been a persistent critic of AMP’s decision to sell its life unit.
The Commentariat
The Australian's wealth editor James Kirby writes that NAB’s economics team has tackled the question of “how bad is the house price drop?” head-on. He challenges NAB’s assertion it is the worst drop since since World War II, arguing it is actually the fourth worst since World War II. Kirby still believes things are bleak, referencing the International Monetary Fund’s comments yesterday that the Australian residential market was worse than it thought, agreeing that it was.
“What might be of more concern is the commentary from NAB’s economic team in assessing net housing worth, where the bank suggests ‘further declines seem likely given tighter credit conditions’. And these folks should know: they are with one of the nation’s biggest lenders.”
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