Scott Morrison blasts AMP as its share price tumbles
AMP’s share price is tumbling after yesterday’s admissions at the Royal Commission, and Treasurer Scott Morrison has raised the spectre of jail time for directors found guilty of breaking the law.
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AMP shares continue to fall after the wealth management giant admitted charging clients for advice they never received and said its staff had repeatedly lied to the corporate watchdog.
More than $600 million was slashed from AMP’s market capitalisation on Tuesday after the royal commission heard AMP lied or misled the Australian Securities and Investments Commission about its business practices on 20 occasions, which resulted in clients being charged fees for services they didn’t receive.
The company’s shares were down another nine cents, or two per cent, at $4.46 at 1210 AEST on Wednesday, their lowest level since November 2016.
Treasurer Scott Morrison described the revelations about AMP as “deeply disturbing”.
“I am very reassured by the fact that these matters were already being pursued by ASIC and will continue to be pursued by ASIC,” Mr Morrison told reporters in Sydney on Wednesday.
“This type of behaviour can attract penalties which include jail time. That’s how serious these things are.”
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He said the AMP revelations show the government was right to ensure the commission was a broader inquiry of the financial sector, and didn’t just look at the banks as the opposition had wanted.
But shadow treasurer Chris Bowen said the government had spent two years saying a royal commission was not necessary.
“The fact is the Turnbull government had to be dragged kicking and screaming to this major backflip,” he said in a statement.
“It would be truly galling today for those victims of these scandals to see Scott Morrison try to take credit for calling a royal commission.”
Labor’s finance spokesman Jim Chalmers said the AMP revelations were “incredibly concerning”, but denied the broader investigation posed a sovereign risk for Australia.
“That term gets bandied around a lot. It’s very rarely appropriate in my view,” Dr Chalmers told reporters in Brisbane.
“If investment in Australia relies on the continuation of some of these horrible practices, then we’ve got a bigger problem.”
AMP group executive for advice, Jack Regan, on Tuesday admitted one letter to ASIC claimed clients were at fault for being charged ongoing fees when in some cases it was the result of a conscious effort by AMP.
The inquiry heard AMP deliberately and unlawfully continued charging fees to “orphan” clients for three months despite them not receiving advice services. The company presented an independent report to ASIC last year as a follow up to the activity, but only after it went through 25 draft versions and a series of changes from senior executives and the board.
On Wednesday AMP apologised “unreservedly” to customers, the regulator and the broader community.
“AMP is deeply disappointed that its advice business has charged customers fees where service has not been provided and for misleading the regulator in this regard,” the company said in a statement.
“AMP has prioritised the remediation of customers affected by the issues discussed in the royal commission yesterday.”
The wealth management giant and the nation’s big four banks have paid almost $219 million in compensation to more than 310,000 financial advice customers charged fees for no service.
More than 15,700 AMP customers have been paid a total of about $4.7 million.
Originally published as Scott Morrison blasts AMP as its share price tumbles