Hedge Clippings | 01 September 2023
Reputation and trust are everything!
Anyone involved in financial services - irrespective of which side of the desk they're on - is well aware of the importance of reputation and trust, particularly so as an advisor providing financial advice, or as a fund manager investing other peoples' money. Of course, that doesn't stop dodgy operators, normally driven by both their own greed, and assisted by the greed of some investors, from having a go. When it does occur, it inevitably ends up in tears for the investor, and loss of reputation (or worse) for the perpetrators, as the banks discovered during the Hayne Royal Commission.
Mayfair 101 is a prime example and one suspects that's the reason head honcho and salesman James Mawhinney is trying so desperately to salvage his reputation. For the record or the forgetful, Mayfair went down the gurgler, along with over $200 million of "sophisticated" investors' money, thanks to some slick advertising and endorsements from some who should have known better. Finally, ASIC took court action to shut the failed operation, and Mawhinney in turn has fought back, and is reportedly set to re-launch Mayfair. However, in spite of 93% of their reviews on Trust Pilot being "5 star", his reputation is forever settled. If anything, the reputation of Trust Pilot as a reliable source of information is tarnished by association as well.
Which brings us to the complete destruction (in our view) of the reputation of Qantas, along with that of CEO Alan Joyce. To be fair, the so called "National Carrier's" reputation as a five star airline took a beating some time ago, as service levels, baggage handling, flight delays, and just about every other factor, other than their safety record, went into a spin.
More recently, the obfuscation around expiring flight credits (since reversed thanks to widespread publicity including a Senate grilling for Joyce), Qantas Chairman's Lounge membership for Albo's son, and political pressure to block competition from Qatar Airways, has added to their woes. Finally, this week the ACCC finished the job by taking Qantas to court for advertising flights which had already been cancelled. Presumably, the logic behind this was either to garner even more flight credits, or to stop passengers booking elsewhere. Either way, immoral, and in the ACCC's view, illegal.
Qantas was once one of the most valuable brands in Australia, and possibly the world. Greed and a simple lack of ethics has destroyed that, and Joyce's reputation with it. Along with Albo's, and the combined Qantas boards', reputations tarnished by association.
As the ACCC's case drags through the courts, and the media, the damage will continue. Joyce meanwhile will be long gone, pockets bulging. We pity his successor, who will have to pick up the pieces.
While on the subject of handovers and successors, next Tuesday's RBA meeting will be Philip Lowe's last before handing over to his deputy Michelle Bullock. We suspect no change in direction, and that Lowe will leave - as history will show - with an excellent reputation. Some will note his misjudged "no rate rise until 2024" comment "forecast" but he seems to have traversed his "narrow path" well.
Finally, last week we included this photo of Mick Jagger and Mitch McConnell.
The week's news only confirmed what we all (possibly with the exception of Mitch himself) knew.
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