Banking royal commission colours perception of IAG exit
IAG is the latest example of how developments in the finance sector are being seen through a banking royal commission prism.
While the gossip piles on for IAG, there is a looming decision for the big banks over whether they should follow the second tier banks in lifting home loan rates.
Some say it's a question of when but, politically, the royal commission has made the call tougher.
Its not that simple and just maybe, for the first time in their lives, the big banks will discard their lemming suits and actually stand on their own two feet with different mortgage rates.
CBA and ANZ, at different ends of the Big Four spectrum, both have reasons not to increase rates because in a tight credit market with housing volumes low they both want to increase their market share.
Maybe this means neither can be relied on to follow if NAB or Westpac pull the trigger on a home loan rate increase.
In recent days the spread between overnight cash rates and 90-day bill rates has actually eased a touch which takes some pressure off he banks.
NAB’s call that the royal commission has made offshore investors a bit more nervous is an exaggeration and certainly other banks don’t find the same reaction when they do the rounds.
Back to IAG and, as noted elsewhere when this story first broke, its not a great time to lose your chief counsel.
Chris Bertuch, who joined the company from CSR in 2011, is highly regarded both internally and externally and just maybe, in his mid 50s he thought it was time to move on but the timing was lousy from a perception viewpoint.
In September, IAG is due to join other insurers under the royal commission spotlight and the two known hot spots are Swann Insurance and so-called add-on insurance.
Like all matters royal commission, neither are new news, given ASIC has already taken legal action on both fronts but maybe it's a question of being placed in the spotlight.
Add-on insurance is where consumers are hit with a string of products they don’t need.
In a statement last December, when IAG agreed to pay $39 million in remediation, ASIC’s then acting chair Peter Kell said “this large scale remediation sends a strong message to insurers selling add-on products.
“Add-on insurance has been under the spotlight because of significant problems with product design and sales. Insurers should be taking active steps to ensure their customers are not being sold products that provide little or no value,” he added.
Just the sort of material the royal commission loves to stir up. And the guy who used to be responsible for Swann Insurance? Present-day IAG boss Peter Harmer.
If you want to draw the bow even longer, guess who ran IAG until 2013? Mike Wilkins, the man now running the beleaguered AMP.
There is plenty to talk about and in this environment the facts are seemingly not nearly as important as the speculation. That is until we see exactly what Ken Hayne and his team have dug up from the material supplied by IAG.
In midafternoon trade IAG was down 0.55 per cent at $8.175 a share.
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The financial services royal commission has changed the lens through which decisions are made and considered in the sector with IAG Chris Bertuch’s departure today just one more example.