Banking royal commission: AMP boss Craig Meller to step down immediately

AMP has apologised and its “devastated” boss Craig Meller has stood down immediately after revelations of misconduct.

Standing down immediately: AMP CEO Craig Meller, Pic: Hollie Adams

AMP chief executive Craig Meller has stepped down with immediate effect and will forfeit his bonus after the royal commission revealed shocking instances of misconduct at the $13 billion wealth management giant, including where the company doctored independent reports and misled the regulator.

The financial services provider has also apologised “unreservedly” for the advice scandals revealed at the royal commission.

The wealth management giant announced this morning that Mr Meller had “agreed” to retire immediately.

He had earlier flagged his retirement at the end of 2018, before the second round of hearings for Kenneth Hayne’s royal commission revealed systemic misconduct in the way the company charged fees to customers who weren’t receiving any service.

Mr Meller will forego any equity bonus relating to the latest financial year.

Mr Meller said he was “personally devastated” by the issues uncovered and the impact on customers, and stepping down was “an appropriate measure” to begin the work needed to restore trust in AMP

AMP group counsel, Brian Salter, the company’s top legal eagle, will also take leave while a review of the company’s regulatory compliance is undertaken.

Mike Wilkins, a non-executive director on the AMP board since September 2016 and a former chief executive of Insurance Australia Group, will take over in Mr Meller’s place until a permanent replacement is found.

AMP will also undertake an “immediate, comprehensive review” of the company’s regulatory reporting and governance processes. The company said this work will be overseen by a retired judge or equivalent independent expert and will be “appointed imminently”.

A board committee will also look at the issues raised by the royal commission, which will be led by Mr Wilkins and assisted by law firm Kingwood & Mallesons.

The wealth management giant’s share price has been in free fall all week after AMP admitted to charging clients for advice they never received and repeatedly lying to the corporate watchdog.

The shares hit a four-year low yesterday, after the royal commission heard that the company had doctored a supposedly independent report on the scandal by law firm Clayton Utz and misled the Australian ­Securities & Investment Com­mission.

The inquiry heard Mr Meller’s name was deleted from the report into AMP’s deliberate charging of fees for services that were never delivered to financial advice clients. A paragraph exonerating him was added at the last moment.

“AMP apologises unreservedly for the misconduct and failures in regulatory disclosures in our advice business,” AMP chairman Catherine Brenner said. “The board is determined that we will meet these challenges head on, accelerating changes in both culture and performance at AMP.

“We have been driving much-needed change and improvement in our advice business, which has undergone significant leadership and governance renewal over the past year but we know we have much more to do to,” she said.

Mr Meller said he was “honoured” to have led the company.

“I am personally devastated by the issues which have been raised publicly this week, particularly by the impact they have had on our customers, employees, planners and shareholders,” Mr Meller said.

“This is not the AMP I know and these are not the actions our customers should expect from the company. “I do not condone them or the misleading statements made to ASIC. However, as they occurred during my tenure as CEO, I believe that stepping down as CEO is an appropriate measure to begin the work that needs to be done to restore public and regulatory trust in AMP.”

AMP Ceo Craig Meller and chairman Catherine Brenner at the AMP annual meeting. Pic: AAP

Scott Morrison warned on Wednesday that executives could face jail time over the behaviour and ASIC is investigating the ­company.

Mr Meller yesterday acknowledged that the advisers and many of their clients would be “shocked” by the revelations, but an ongoing ASIC investigation had prevented AMP from sharing more information earlier.

Mr Meller has said the fee-for-no-service issue is complex, involving the inappropriate charging of ongoing service fees by advisers, as well as a business practice to leave the fees in place for 90 days when clients were transitioning between advisers.

AMP reported to the royal commission that 15,712 customers were affected by the practice between 2009 and 2016.

A remediation program resulted in the repayment of $4.7 million to customers, with $850,000 related to the so-called 90-day exception rule.

Mr Meller said charging fees for no service was not appropriate, and AMP had stopped the practice in 2016.

In a key admission, he said the way that the company had reported the matter to ASIC was “misleading”.

Bell Potter analyst Lafitani Sotiriou, who has been urging investors to sell out of AMP for two years in the face of higher compliance and regulation costs, said the royal commission was likely to force a complete board renewal at the group.

Mr Sotiriou said there was the growing risk of a class action, as investors could argue they had not been appropriately informed.

Meanwhile, questions would be asked if management conducted an audit of its affairs that resulted in a significant revision of the group’s earnings expectations.

AMP was also likely to face further customer compensation and higher ongoing compliance costs.

Since assuming the chair of the financial services giant, Ms Brenner’s leadership style has ruffled feathers.

In her first months in the job, she said management had to work “faster” to deliver returns for shareholders and then, subsequently, disclosed a major shareholder had called for the sacking of Mr Meller.

Mr Meller flagged his year-end retirement before the company was due to face hearings at the royal commission this week.

Persistent talk that a divided board led to the abrupt departure of former AMP chairman Simon McKeon have plagued the company since it was announced in early 2016.

The reasons for Mr McKeon’s exit have still not been publicly revealed, but several reports have suggested there was friction between board members as to the acceptable rate of return on the business.