AMP shares dip after costs admission
AMP shares almost returned to their all-time low after the financial services provider confirmed it is facing $778 million in remediation costs over its fees-for-no-service scandal and is expanding its internal investigations.
Shares in the firm slipped as much as 5.7 per cent in early trade yesterday to sit just one cent above the all-time low of $2.28 to which they sank last month. They had recovered to $2.35 by close.
The sell-off came a day after acting chief executive Mike Wilkins said AMP had initially underestimated the scale of its fees-for-no-service problems when it was discovered in 2016.
AMP confirmed the $778 million pre-tax estimate in a statement yesterday, laying out $318 million in costs and lost earnings for which it has not yet provisioned. Australia’s largest wealth manager at one stage feared the program could end up costing more than $1 billion, but said the figure was now lower because it was acting more quickly.
“The figure of $1.185 billion referenced in the Royal Commission was an early estimate of the total program costs (now estimated as $778 million),” AMP said in the statement.
“This estimate was based on a nine-year time frame for remediation that was rejected as unacceptable for customers by management and the board.”
AMP also confirmed is was now investigating the provision of general advice to corporate super plans prior to the Freedom of Financial Advice reforms of 2013, but that it doesn’t expect the amounts involved to be material.