AMP shares slide as it comes under more scrutiny at banking royal commission

An AMP planner steered clients into buying property through a real estate firm he secretly co-owned, inquiry hears.

An AMP financial planner steered at least 10 clients into buying property through a real estate business he secretly co-owned, the banking royal commission has heard.

And after AMP got rid of him, its employees were told not to provide any information to his new employer, Dover, where he is still listed as an authorised representative.

This is the second financial planner whose behaviour has been examined by the commission who has left one business under a cloud and popped up at Dover.

The inquiry has also heard that the embattled financial services group has to this day failed to contact more than 100 clients ripped off by shoddy financial planners two years ago because its remediation team has not had enough resources.

AMP (AMP) shares closed down more than 3 per cent at $4.17 amid news of two potential shareholder class actions.

Evidence today returned to AMP which lost its chief executive Craig Meller last week after explosive testimony at the inquiry showed it misled the corporate watchdog 20 times over a scandal in which it deliberately charged clients for fees they did not receive.

Terrance Campbell, chairman of the country’s largest listed investment company, AFIC, which has $100m invested in AMP, said he was shocked at evidence presented in the royal commission.

“In a general sense, and this could apply to AMP, is that we’ve been disappointed with what we’ve heard -- and frankly surprised. Our views would not be much different to those of a large part of the population,” Mr Campbell said.

“My experience in business has been, if you look after your clients, the business looks after itself. You need to take a longer term view of business. Acting in the interests of the clients might not drive short term revenue, but it will lead to larger revenues in the longer term. If you treat clients like this, they’ll never do business with you again. These advisory businesses need to restore trust and it will be a long process.”

Today, the commission heard evidence about three planners — Jennifer Colman, Adam Palmer and a man codenamed “Mr E”.

The commission heard that Mr Palmer worked for AMP’s Genesys business, which has since been shut down, between 2013 and 2014.

Company documents filed with the Australian Securities and Investments Commission show that in 2013 Mr Palmer also became a director of and the 60 per cent shareholder in a company called Property Saint.

His first audit earned him an ‘E’ grade — a fail and the worst available rating — and discovered that “all SMSF clients are referred to an Eddie in this business.”

Genesys terminated him in August or September 2013 but decided not refer Mr Palmer to ASIC in November that year. He was not reported until July 2015.

Clients were offered an “advice review”, but no remediation.

They have still not been compensated, AMP’s head of advice compliance, Sarah Britt, admitted.

Under questioning from counsel assisting the commission, Rowena Orr, Ms Britt had difficulty accepting Mr Palmer’s conduct was dishonest, even though that is what AMP called it when it finally got around to telling the regulator.

“There was no evidence of actual dishonesty” at the time she prepared her statement for the commission earlier this month, she said.

“But I accept obviously that it is a matter of grave concern that the adviser hasn’t disclosed his interest in this property business.

“I was basing my opinion on the document review that I undertook. I know that when we subsequently did report this adviser to ASIC we broadly did, we possibly did use the word dishonest.”

Asked again if she accepted Mr Palmer’s behaviour was dishonest, she said: “I accept that it could be interpreted as dishonest.”

Clients of Mr E and Ms Colman received bad advice and are to be compensated but have not been told anything about this by AMP.

AMP insisted that the remediation team now had enough resources to do its job.

“Historically we underestimated the task ahead of us,” she said.

The commission heard Ms Colman had a pattern of putting clients into insurance that was more expensive than she disclosed in her statements of advice and had 100 clients who required remediation.

June 26, 2014

Royal Commission timeline

The Senate economics committee calls for a royal commission following a lengthy inquiry into ASIC’s performance that focused on financial planning scandals at the CBA.

April 21, 2016

Royal Commission timeline

In an attempt to stave off continuing calls for a royal commission, the Australian Bankers Association announces former senior public servant Ian McPhee will oversee an overhaul of industry standards and practices.

November 30, 2017

Royal Commission timeline

After years of denying a royal commission is needed, the banks write to Prime Minister Malcolm Turnbull asking for one. He obliges.

February 12, 2018

Royal Commission timeline

Commissioner Kenneth Hayne formally opens the inquiry and sets the tone by laying into the big banks for failing to provide all the information he wanted in time.

March 13, 2018

Royal Commission timeline

The commission’s first full public hearings hear about consumer credit issues including a home loan fraud ring among NAB bankers in Western Sydney and out-of-control mortgage brokers at CBA subsidiary Aussie Home Loans.

April 16, 2018

Royal Commission timeline

Second round of hearings kicks off with a focus on one of the industry’s most scandal-prone sectors, financial planning.

It heard that Mr E had a penchant for rolling his clients into the group’s superannuation products, sometimes costing them thousands in exit fees from the funds they were leaving.

In one case, a client lost $16,000 of his modest $125,000 nest egg in an exit fee charged by TAL after following Mr E’s advice to roll his super into AMP’s MyNorth fund in November 2016.

The man and his wife are among clients to be remediated by AMP, none of whom have been contacted by AMP.

“We’re not in a position to look at Mr E’s entire book of clients currently,” Ms Britt said.

“We have not scaled up our remediation program as quickly as we should have.”

She said the entire industry “got caught by surprise by the scale and complexity of some of these remediation issues”.

Remediation was made more complicated because AMP mostly uses self-employed advisers who act as its representatives.

“We have to accept that we shouldn’t be where we are,” Ms Britt said.

“It isn’t acceptable that these clients haven’t been looked at, haven’t been contacted.”

Mr E, who worked at a financial adviser affiliated to AMP that cannot be named, received a ‘C’ rating, meaning there were areas where he required improvement, in September 2016.

The couple’s file was among those examined when AMP audited him again in March last year. He earned an ‘E’, a fail mark and the lowest possible rating.