Hello John Veet - hardly an analysis, just an interesting comparison .
Following through on this I don’t know what the asset base of AMP was last year when Australian Ethical decided to divest nor what amount it had invested there in the first place .
...and I agree, an ethical fund being seen to be following ethical practise is good publicity ....particularly so if it’s actions ‘pay off.’
Curiously I just noticed another story, this one from today, mentioning both entities :
The reference to IOOF ( the last sentences ) comes in relation to today’s Macquarie update:
“In a note to clients today, Macquarie analysts also noted the remediation guidance of between $5m and $10m provided by IOOF was inadequate, estimating that the financial services company may need to recognise remediation to about $600m.
“For IOOF, the absence of any provisions to date means they are well behind peers in addressing potential misconduct and may subsequently need to accelerate any remediation expenses to catch up to peers,” Macquarie said.”
Here’s that story in it’s entirety as well in case anyone does not subscribe .
AMP could be up for an additional $1.5 billion in customer remediation, according to Macquarie analysts, who say the remediation process could be far from over for the beleaguered wealth manager.
The level of remediation charges over the next four years could be between $400 million and $1.5bn, on top of what AMP (AMP) previously estimated would be needed to cover the potential costs of the fee-for-no-service scandal.
In November, then-acting CEO Mike Wilkins said the total cost of remediation stood at $778m, inclusive of remediation, lost earnings, reviewing customer accounts and a range of other costs.
That cost could rise to as much as $1.18bn if the remediation program took as long as nine years, Mr Wilkins said at the time.
Referencing the payment protection insurance scandal in the UK, which is broadly estimated to have cost the UK banking system more than £40bn ($72.8bn) in customer redress, Macquarie analysts applied estimates of additional remediation charges using a front-loaded allocation that gradually tailed off over a four year horizon.
They said that there was a heightened risk that the time frame for remediation could be more weighted towards the early years for AMP compared to the major banks, due to AMP having a new CEO, who may look to be more decisive in addressing issues.
“Following their recent asset sales, AMP does have additional capital flexibility, however they would have to liquidate some of the income generating assets they received as payment for their assets, impacting investment income,” the analysts said.
Macquarie’s estimates come after last year’s royal commission heard allegations that AMP misled ASIC at least 20 times in relation to the fee-for-no-service scandal, as well as claims that AMP’s board had interfered with an independent report on an investigation into the scandal.
The revelations also forced the exit of then chief executive Craig Meller.
In a note to clients today, Macquarie analysts also noted the remediation guidance of between $5m and $10m provided by IOOF was inadequate, estimating that the financial services company may need to recognise remediation to about $600m.
“For IOOF, the absence of any provisions to date means they are well behind peers in addressing potential misconduct and may subsequently need to accelerate any remediation expenses to catch up to peers,” Macquarie said.”
SAMANTHA BAILEY BUSINESS REPORTER
Samantha Bailey (nee Woodhill) is an online business reporter. Prior to joining The Australian, she worked as a digital journalist and producer for Sky News, and as editor of a legal trade magazine.
(20min delay)
