Royal commission: AMP could face criminal charges over scandal
UNDER-siege financial advice giant AMP could face criminal charges for misleading the corporate cop over a decade-long scandal in which it charged customers for services they never received.
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UNDER-siege financial advice giant AMP could face criminal charges for misleading the corporate cop over a decade-long scandal in which it charged customers for services they never received.
AMP chief executive Craig Meller last week lost his job over the scandal and Treasurer Scott Morrison has floated the possibility of criminal charges.
On Friday Rowena Orr, QC, counsel assisting the royal commission into financial services, told commissioner Ken Hayne he could find AMP had contravened the Corporations Act, which could indeed lead to criminal penalties.
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She said this stemmed from AMP making “false or misleading statements” to the corporate watchdog, the Australian Securities and Investments Commission, as it probed the AMP charging clients ongoing service fees, despite not having a planner assigned to them.
It is understood criminal charges would be against the company and not individuals, although sources say the ongoing investigation could lead to charges against some individuals, with fines of up to $210,000.
Ms Orr said senior AMP executives had manipulated a report which was then presented to the ASIC as independent.
AMP chair Catherine Brenner, chief Craig Meller, counsel Brian Salter and head of advice Anthony “Jack” Regan “either marked up or suggested amendments” to the draft report prepared by Clayton Utz, she said.
AMP had 25 drafts of the report. And it misled ASIC 20 times about its efforts to address the “fees for no services” issue.
Ms Orr said four of the 20 misleading statements to ASIC could have contravened two other sections of the Corporations Act relating to false or misleading documents.
“The senior management and executives who contributed to the misleading of ASIC over the two-year period had knowledge of the extent and nature of the conduct and were warned by junior staff about it being a breach, but continued,” she said.
The “fees for no services” started in 2007 and AMP discovered it in 2008 — but only ended it eight years later.
AMP on Friday said it acknowledged the seriousness of the closing submissions.
“We are reviewing them closely and will respond fully next week,” it said.
ASIC ADMITS FAILURE TO PROSECUTE OVER NON-REPORTING
THE corporate cop has told the royal commission it has never cracked down in court on companies that fail to report dodgy financial planners within ten days of discovering them, the royal commission heard.
The commission has seen a procession of big lenders fail to tell the Australian Securities and Investments Commission of rogue planners until well after the required reporting window closed.
ASIC’s head of financial advice Louise Macauley revealed to the commission that a “period of months” can roll by before information reaches the top of the bank who decides to then report the misconduct.
Counsel assisting the commission, Rowena Orr, asked if ASIC had ever prosecuted any financial institution for exceeding the ten day reporting limit.
“Not to my knowledge,” Ms Macauley said.
Royal commission chief Ken Hayne asked if ASIC had thought of testing this part of the law.
Mr Hayne also said it was odd the law didn’t seem to apply until a senior person at a bank heard about the dodgy employee.
“Is it an unusual position to arrive at that the operation of the law depends on the way those governed by the law organise their own internal affairs,” commissioner Hayne said.
ASIC has proposed giving businesses 30 days to report breaches — compared to the current ten days — to allow business more time to investigate.
WE DON’T TAKE DENUNCIATION APPROACH: ASIC
THE corporate cop says its legal processes restrict it from properly naming and shaming finance sector crooks, the royal commission has heard.
Commission chief Ken Hayne asked ASIC head of financial advice Louise Macauley if her organisation thought about enforcing a “public message” that people who do the wrong thing in the finance sector will be exposed.
“(Is the) regulator taking steps overtly, to demonstrate that bad conduct will be called out and dealt with — again to hark back to the radically different discourse of criminal law generally — it is the notion of public denunciation,” commissioner Hayne said.
He asked if ASIC used that “denunciation” approach.
Ms Macauley said: “I think you can say it doesn’t at the moment.”
“There are constraints about what we can say about banning and the process takes place privately. The decision is private,” she said.
While ASIC does put out media releases with a brief explanation of the conduct and naming those involved, she acknowledged there were still constraints on what it could say.
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