AMP ad­mits dirty deeds and de­cep­tions

The Australian - - FRONT PAGE - BEN BUT­LER

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.

Source: Bloomberg

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

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