AMP has rejected claims that it may have breached the Australian Corporations Act in its handling of an independent report into ‘fee for no service’ practices within its financial advice business, and that breaches related to the practice should be handled by ASIC and not the Banking Royal Commission.
The statements were made as part of an AMP Group submission responding to issues raised at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and closing comments from Senior Counsel Assisting the Commission, Rowena Orr QC, that AMP may have breached the Act on a number of occasions (see: AMP, Banks May Face Criminal Charges Over Advice Failings).
In the submission, AMP stated “…it strenuously denies the allegation by Counsel Assisting that it is open to find that AMP has committed a criminal offence in providing the Clayton Utz report to ASIC”.
AMP added that the independent report produced by law firm Clayton Utz on the fee for no service issue was “…an uncompromisingly direct 87-page review of the conduct of the advice business in relation to fee for no service matters”.
The submission added that while former AMP General Counsel, Brian Salter may have been extensively involved in the preparation of the report “…there is no evidence before the Royal Commission that Mr Salter made any changes that Clayton Utz did not agree with, or that Clayton Utz does not stand behind the report”.
AMP also stated “there is no evidence to suggest that the Board, including the former Chairman [Catherine Brenner] and former CEO [Craig Meller], acted inappropriately in relation to the preparation of the report”.
Fees For No Service
The company also pushed back on the Commission’s examination of the ‘fee for no service’ issue stating it was not new and it was not uncovered by the Commission. Instead, it had been the subject of an ongoing ASIC investigation since 2015, was disclosed by AMP in detail to ASIC in October 2017 and listed in evidence provided to the Royal Commission in March 2018.
AMP also argued that since the matter was already under investigation by ASIC, any enforcement action should remain under the jurisdiction and oversight of the regulator.
“The issues raised in the fee for no service case study concerned matters that are almost entirely the subject of an ongoing ASIC investigation,” the submission stated, adding “As AMP understands, ASIC was nearing completion of that investigation at the time the Royal Commission hearings commenced”.
“AMP fully expects ASIC will deal with the serious matters being investigated in an appropriate manner consistent with ASIC’s enforcement priorities and under a proper process with any affected parties having had the opportunity to be heard,”
“AMP further submits that the proper forum for a determination regarding AMP’s conduct is before ASIC, and any judicial proceeding ASIC may commence.”
AMP also announced that it had appointed former Chief Executive Officer of the Commonwealth Bank, David Murray as the Chair of the AMP Board.
Murray will take on the role of Chair after the AGM on 10 May, and on or before 1 July 2018, succeeding Catherine Brenner who stood down recently following AMP’s testimony at the Royal Commission (see: AMP Chair Resigns Following Royal Commission Revelations).
The role of Board Chair had been filled temporarily by Mike Wilkins, as Executive Chair, who will now return to the position of acting Chief Executive Officer.
AMP stated that Murray will being involved in the redevelopment of governance processes and Board renewal and will work with Wilkins in finding a permanent Chief Executive Officer, at which time Wilkins will return to his role as a Non-Executive Director.
Three other non-executive directors have announced their resignation from the AMP Board (see: Three More Resign at AMP).
Wilkins said AMP shareholders “…are demanding board accountability and need to know that meaningful change is underway,” adding the directors “…have listened to and acted on the feedback from our investors”.