Bank, AMP shares surge on royal commission findings

Banks shares have rocketed in the wake of the banking royal commission, with most up more than 4 per cent.

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Banks shares have rocketed in the wake of the banking royal commission, with most up more than 4 per cent.

AMP shares also added more than 6 per cent in early trade, although this would be cold comfort for shareholders who have seen more than half of the stock’s value disappear since its serious misconduct was made public at the royal commission.

ANZ shares were up almost 5 per cent, Commonwealth Bank was up 4.2 per cent and Westpac was almost 6 per cent higher.

NAB, which was singled out by Commissioner Kenneth Hayne for its poor response to the inquiry, was up 3.5 per cent.

In his final report made public on Monday, Commissioner Hayne welcomed noises from rivals Commonwealth Bank and ANZ but said NAB stood apart from the other big four banks in its response to industry failings aired at the commission hearings.

“Having heard from both the CEO Mr Thorburn, and the chair Dr Henry, I am not as confident as I would wish to be that the lessons of the past have been learned,” Commissioner Hayne wrote.

“I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do, and then having its staff act accordingly.”

Commissioner Kenneth Hayne and Treasurer Josh Frydenberg with the final report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, at Parliament House in Canberra. Picture: Kym Smith

Dr Henry, a former head of Treasury, insisted the bank had reflected deeply on issues raised and took them seriously.

“I am disappointed that the commissioner formed this view,” Dr Henry said on Tuesday.

“I know that it is not so.”

AMP, which lost its chairman and chief executive last year as a result of the commission, has acknowledged the conflicts of interest in financial services highlighted by Mr Hayne in his final royal commission report, but says there are still benefits to its business model.

AMP said today the royal commission had already been a catalyst for change at the company.

Chairman David Murray, who last year replaced Catherine Brenner in one of those changes, said AMP’s advice model offered benefits to consumers despite Commissioner Hayne’s reservations about vertically integrated financial services.

Commissioner Hayne’s recommendations include advisers disclosing any lack of independence to clients, the ending of grandfathered commissions, and an end to the hawking of superannuation products.

“AMP notes that the benefits of vertical integration remain available for customers while acknowledging that conflicts of interest need to be more effectively managed,” Mr Murray said in a statement.

“The proposed regulatory changes will require serious and determined effort to implement but, with the support of industry, should deliver better outcomes for customers.”

Australia’s largest wealth manager listed a raft of changes already implemented from the royal commission, including the appointment of Mr Murray — the former Commonwealth Bank chief executive also led the 2014 inquiry into the financial services sector.

AMP faces possible criminal prosecution for misleading ASIC over fees for no service after thousands of dead superannuation customers were charged for life insurance.

AMP on Tuesday said it was on track to improving culture, governance and accountability under chief executive Francesco De Ferrari, the permanent successor to the departed Craig Meller.

In January, the wealth manager flagged a 96 per cent drop in full-year profit after confirmation they would set aside another $200 million to cover the cost of customer remediation following the royal commission.

“There is more work to do as we are determined to earn back the trust of our clients, our shareholders, our regulators and the wider Australian community,” AMP said in a statement.