Banking royal commission: AMP rejects ‘criminal’ claim, defends board over fee-for-no-service scandal

AMP denies it may have committed a criminal offence and told inquiry there’s no evidence its board acted inappropriately.

Gone from AMP — former CEO Craig Meller and former chair Catherine Brenner. Pic: AAP

Financial services major AMP says “there is no evidence” to suggest that its board, including former chairman Catherine Brenner and former chief executive Craig Meller, acted inappropriately in relation to the preparation of a Clayton Utz legal report investigating the fee-for-no-service issue.

AMP also said it “strenuously denies” allegations it may have committed a criminal offence by misleading regulators.

However it has admitted almost 16,000 of its customers paid fees for financial advice they did not receive.

The comments were made in AMP’s submission to the banking royal commission, in response to allegations AMP committed crimes by lying to the corporate regulator over a scandal in which it charged customers for services they never received.

Counsel assisting Rowena Orr QC last week told the royal commission that it should be open to finding that in four of the 20 times AMP misled ASIC over a fee-for-no-­service scandal, it breached four sections of the Corporations Act that carry criminal penalties.

The allegations led to last weekend’s resignation of Ms Brenner as chairman of AMP.

But AMP (AMP) today released a cache of documents claiming the extent of the interaction between AMP and Clayton Utz in preparation of the legal firm’s report has been “overstated”.

“In AMP’s submission to the royal commission we assert that: there is no evidence to suggest that the board, including the former chairman and former CEO, acted inappropriately in relation to the preparation of the report,” AMP said.

“The board were not aware of the nature and extent of the interaction during the preparation of the report; there is also no evidence that Clayton Utz made any changes to the report that they did not agree with or that they do not stand behind the report; and the extent of interaction between AMP and Clayton Utz has been overstated.

“Irrespective of the criticism surrounding the production of the report, it was an important and powerful catalyst for the actions AMP has taken and is taking to address the challenges in the advice business.”

In a statement, AMP said while it takes responsibility for its past failings in relation to fee-for-for-no-service and has taken steps to ensure that these failings do not recur, it “does not accept all of counsel asssisting’s open findings”.

“AMP strenuously denies the allegation by counsel assisting that it is open to find that AMP has committed a criminal offence in providing the Clayton Utz report to ASIC,” AMP said.

AMP noted the issues raised in the fee-for-no-service case study presented to the royal commission concerned matters that are almost entirely the subject of an ongoing ASIC investigation.

AMP said to date, it has repaid 15,712 customers a total of $4.7 million in relation to the “fee-for-no-service issue.

In most cases fee charges were the result of administrative error, AMP said, while a minority were cases where charging of fees was authorised.

“We are determined to do everything we can to restore the trust of our customers and of all Australians. We have taken responsibility for the issues and continue to take extensive action to fix them,” AMP said in its statement.

“In the past two years, we have made wideranging changes to processes and systems within our advice business and implemented a comprehensive program to overhaul governance and controls, with the aim of ensuring that these issues never happen again,” AMP said.

Ms Orr said last week that AMP and its advice businesses misled ASIC 20 times from 2015 to 2017 about the nature and extent of its fees-for-no-service practice. She said there was misconduct around what AMP described as an external and independent report on the fees issue, which went through 25 draft versions with changes from the company before being given to ASIC.

AMP employees or officers, including former CEO Mr Meller, former chairman Ms Brenner, group executive for advice Jack Regan and particularly general counsel Brian Salter, either marked up or suggested amendments, Ms Orr said.

She concluded the AMP board may have approved the changes to the Clayton Utz report before it was submitted to the regulator last October. AMP said today the report was “uncompromisingly direct and comprehensive” and concerned matters that are subject of an ongoing ASIC investigation that began in 2015.

“Given the seriousness of the matters being investigated, AMP fully expects that ASIC will deal with them in an appropriate manner consistent with ASIC’s enforcement priorities, and under a proper process, with affected parties having had an opportunity to be heard,” AMP said.

“There is no reason for the commissioner to believe that ASIC will not deal with the matter appropriately.”

Also today, AMP pledged to fast-track the selectioon of a new chairman to replace Ms Brenner, who resigned early on Monday as she accepted accountability for governance failings.

That came a little over a week after Mr Meller agreed to bring forward his retirement, stepping down with immediate effect.

The full board of AMP has elected to take a 25 per cent cut in directors’ fees for the remainder of the year, and AMP said today it accepted that further board renewal was necessary, including the appointment of a new non-executive director.

Revelations from the royal commission, and their consequences, have rocked AMP’s share price.

The stock slumped 19 per cent in April, though had started to recover the early part of this week.

With AAP, Dow Jones