ASIC considers criminal charges against AMP

ASIC is considering criminal charges against AMP for lying to it about a supposedly independent report from Clayton Utz.

Former AMP chairman Catherine Brenner.

The corporate regulator is considering criminal charges against AMP for lying to it about a supposedly independent report from law firm Clayton Utz, royal commissioner Kenneth Hayne says.

In a blockbuster interim report, released on Friday, Mr Hayne slammed AMP’s lawless culture and said the allegations were under “active consideration” by the Australian Securities & Investments Commission, citing a section of the Corporations Act under which the regulator can lay criminal charges.

Mr Hayne’s disclosures follow parliamentary testimony in June by ASIC head of enforcement Tim Mullally in which he revealed the regulator was working with the Commonwealth Director of Public Prosecutions on the case.

Misleading ASIC is a crime punishable by a fine of up to $210,000 for a company and up to five years jail for an individual.

AMP may have committed additional crimes by breaking laws prohibiting it from taking money without providing services and by failing to report its sins to ASIC within a 10-day time limit, Mr Hayne said.

“AMP denies allegations that it committed a criminal offence in providing the Clatyon Utz report to ASIC,” AMP spokeswoman Catherine Woods said.

“AMP takes responsibility for the historic ‘fees for no service’ ­issues and our interactions with ASIC in relation to them.” She said it was inappropriate to comment further because the issue was the subject of an ASIC investigation.

Mr Hayne also made findings that crimes may have been committed by big bank Westpac, insurers Select AFSL and Aboriginal Community Benefit Fund and the business run by celebrity financial adviser Sam Henderson.

He said he had no reason to doubt evidence from AMP’s head of financial advice for Australia and New Zealand, Jack Regan, that the company misled ASIC 20 times over a scandal in which it deliberately charged people fees for services they never received.

Law firm Clayton Utz also provided AMP with 22 drafts of a supposedly independent report into the scandal, commissioned by the company’s board, Mr Hayne said.

The revelations in April hammered AMP’s share price and led to the departure of chief lawyer Brian Salter and chairman Catherine Brenner.

Yesterday, Mr Hayne found that “there were senior persons within AMP (I make no finding more precisely than that) who knew of the charging of fees for no service”.

“Internal lawyers warned that it was a breach of law,” he said.

“Despite all of this, AMP provided ASIC with information that was false or misleading. Senior management and executives who contributed to the misleading of ASIC over a two-year period had knowledge of the true extent and nature of the conduct, and, in at least some cases, were warned by junior staff about it being a breach, but continued with a misleading narrative to ASIC.

“The culture and governance practices within AMP revealed by the conduct reflects insufficient concern for adherence to the law.

“On its face it reflects a persistent and prevalent attitude of senior persons within AMP that it is acceptable to deal with ASIC other than frankly and candidly.”

He made no findings about any individual AMP executive.

Mr Hayne also found Westpac may have committed the crime of failing to promptly report a serious breach related to a dodgy financial planner.

He said Select and ACBF, which the commission heard misled indigenous people into buying junk policies, may also have broken the law.

He found ACBF, which despite its name is not run by Aboriginal or Torres Islander people, may have breached two criminal provisions against making false or misleading statements about fin­ancial services. It may have also broken a Federal Court order, potentially putting it in contempt, by not featuring in advertising a disclaimer it agreed to with ASIC in 1999, he said.

During the hearings, Select admitted its sales representative “probably” breached a section of the Corporations Act by failing to give an Aboriginal customer from Arnhem Land a product disclosure statement — an offence punishable by a fine of up to $210,000 for a company or up to two years jail for an individual.

Mr Hayne said the company may also have committed two other crimes by breaking laws against hawking insurance products by cold-calling people.

He said Mr Henderson’s business Henderson Maxwell may have committed a crime, punishable by a fine of up to $105,000, when it lied about his qualifications in a disclosure document given to customers.

Mr Henderson shut the business down in June after a disastrous appearance at the com­mission, during which it emerged one of his employees impersonated Fair Work Commissioner Donna McKenna in phone calls to her super fund. Ms McKenna would have lost $500,000 immediately if she accepted Mr Henderson’s advice, while he would have reaped $11,000 in upfront fees and brokerage plus management fees of $14,000 a year.