AMP Capital’s Sustainable Investments Team undertook an ESG review of a large Australian insurance / wealth management company.
The company has been shrouded in controversies over the last few years. There were a few main issues which were examined at the Financial Services Royal Commission (RC) in 2018 which include inappropriate advice, investment platform fees, fee for no service, misleading statements to ASIC.
Transparency has been an issue for the company over the last few years, with secrecy around executive and board member departures, and refusal to disclose LTI hurdles ahead of time.
Risk and compliance has also been a key issue for the company which was identified at the RC. It didn’t seem like there were sufficient processes to elevate problems to the board level.
There are also significant structural changes occurring in the broader market and long-standing problems embedded in the industries within which AMP operates. Margins will remain under intense pressure from regulatory tightening, changes to taxation are likely and increased competition are imminent.