It would seem from the RC that the new order is now that if an individual approaches a bank for a loan, the onus falls on the bank to ensure the would be customer complies with all relevant guidelines and regulations. Extrapolating this new world concept of lack of accountability up the food chain, one could imply that if a company is operating on the ASX, the onus should fall on the regulatory bodies (APRA, ASIC, etc) to ensure it complies with the relevant guidelines and regulations.
As the press has started turning its attention to the latter, the issue of where were the regulatory bodies and what were they doing while all the events outlined by the RC were occurring becomes increasingly pertinent. The fact that they were aware of some of these issues, while not resolving them, is extremely poor form. So, as you say, with its back somewhat to the wall and with its own integrity and efficacy coming into question, APRA lashed out. IFL, with its lack of separation between board and trustee, became the easy soft target.
You see, I think entities like APRA, failed to fully appreciate that when the proverbial hits the fan, everyone in the room gets sprayed and no one ends up smelling like roses. There is no neutrality. If you are not part of the solution, you are part of the problem. The RC is demonstrating that its not just the financial institutions that have transgressed, but also the regulatory bodies (because the latter knew of at least some of the transgressions occurring and did not act appropriately to correct them).
Which leads to my investment thesis here. If this is indeed merely a lash out at IFL on a somewhat technicality, but the underlying future earnings are unchanged from a few months ago (allowing for some uncertainty in the next 12-24 months as expected on the back of the RC) then this is a time to buy, because IFL's blood is certainly staining the streets at the moment. If however, this is the beginning of a prolonged campaign against IFL, which will uncover numerous more wrong doings (a la AMP for example) and will harm both public perception and future earnings this is a trap.
The risk reward in my view at the moment is that it is worth opening a position, but ultimately only time will tell.
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