AMP admits dirty deeds and deceptions
The name of AMP chief executive Craig Meller was removed from a supposedly “independent” report that the finance giant commissioned from top law firm Clayton Utz to avoid “unnecessary attention” from the corporate regulator, the banking royal commission has heard.
In a day of bombshell evidence that carved $600 million off the market value of AMP, its head of financial advice, Jack Regan, confessed that the company misled the Australian Securities & Investments Commission about a financial planning scandal at least 20 times, and admitted he felt “discomfort” about telling the regulator that Clayton Utz’s investigation into the scandal was independent, given the level of interchange between the company and the law firm over the contents of the report.
AMP last year commissioned Clayton Utz to conduct an “independent” investigation into a seven-year rip-off perpetrated against tens of thousands of financial advice customers who were charged fees for services, such as an annual review of their position, that they did not receive.
Yesterday, the commission heard Clayton Utz provided no fewer than 25 draft reports to AMP, and that the company’s chief legal officer, Brian Salter — a former Clayton Utz partner — successfully pestered the law firm to water down the role of former head of financial advice Rob Caprioli in the scandal.
The commission has also heard that the myriad ways AMP misled ASIC included telling it fees were charged due to an “administrative error” when it was in fact a deliberate decision, that customers had been informed they had been overcharged when they had not, and that in some cases it was the client’s fault for not contacting external investment funds to have the fees stopped.
The commission is in its second round of public hearings, looking into the scandal-ridden financial advice sector, following a session last month that heard of misconduct — including a home loan fraud ring run by NAB bank managers in western Sydney — related to consumer lending.
It was set up by Malcolm Turnbull in November after the big banks bowed to political pressure and asked him for an inquiry, abandoning their arguments that
a probe was not needed because the sector was tightly regulated and under intense scrutiny.
Commissioner Kenneth Hayne said Mr Regan’s evidence raised questions “about the extent to which senior management or others associated with AMP sought to influence or did influence content of the report by Clayton Utz apparently submitted to ASIC as an independent report”.
Mr Meller, who last year earned $8.3 million, will retire at the end of the year, a move announced three weeks ago after the first round of the commission’s public hearings.
Yesterday’s evidence raised questions about the behaviour of the board, led by chairwoman Catherine Brenner, who Mr Regan said discussed the investigation with Clayton Utz partner Nicholas Mavrakis in order “to settle the report”.
The company reviewed the report for “thoroughness”, he told the commission. It was then provided to ASIC, which was investi- gating the so-called “fee for no service” scandal.
Clayton Utz made no findings against Mr Meller and other AMP executives interviewed.
Mr Regan had difficulty explaining why Mr Meller was the only one whose name was deleted from the report.
Mr Regan, who replaced Mr Caprioli in January last year, said there were several areas where AMP needed to “improve significantly ... it starts with culture, it goes to governance, it goes to capability, control systems, processes, but culture is the invisible hand that ensures people are making the right decisions”.
As he spoke, AMP’s share price fell, ending the day down 4.4 per cent. An AMP spokeswoman declined to comment on Mr Hayne’s concerns, but said the company was “deeply disappointed its advice business has charged customers fees where service has not been provided and for misleading the regulator.
“We apologise unreservedly,’’ she said.”
Clayton Utz declined to comment.
AMP chief executive Craig Meller’s name was the only one deleted from a report by law firm Clayton Utz on its fee-for-no-service scandal, the royal commission heard