Banking royal commission: AMP’s misconduct ‘criminal’ as chair faces ouster

The AMP board will ask chairwoman Catherine Brenner to resign this weekend.

AMP’s former chief executive and chairwoman Catherine Brenner. Picture: John Feder

The AMP board will ask chairwoman Catherine Brenner to resign this weekend after the banking royal commission’s counsel alleged the financial services giant committed crimes by lying to the corporate regulator over a scandal in which it charged customers for services they never received.

If she resigns at an emergency board meeting to be held tomorrow, Ms Brenner will become the second senior AMP scalp claimed by the commission, following the early exit of chief executive Craig Meller last week.

The crisis meeting follows talks over the past week between AMP management, now led by interim chief executive Mike Wilkins, and other directors about Ms Brenner’s future, following the company’s humiliation in the royal commission. Mr Wilkins is expected to become AMP’s executive chairman after Sunday’s meeting.

Shocking evidence of misconduct has pummelled finance sector stocks. AMP shares have led the way down, tumbling almost 16 per cent over two weeks, slashing more than $2bn from the market value of the company.

AMP’s boardroom turmoil follows another day of devastating hearings for the banking industry. Counsel assisting Rowena Orr QC asked commissioner Kenneth Hayne to decide that the big four banks — ANZ, Commonwealth Bank, NAB and Westpac — had committed misconduct, on top of finding crimes were committed by AMP.

Ms Orr 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, attracting a fine of up to $180,000, and one section of the Australian Securities and Investments Commission Act.

GRAPHIC: What the royal commission heard

Allegations against the banks have ranged from charging fees for no service — in CBA’s case, by taking fees from the dead — to employing shonky advisers who ripped off customers — including, in ANZ’s case, by stealing hundreds of thousands of dollars.

Also rocked by yesterday’s ­session was the corporate regulator, the Australian Securities & Investments Commission, which admitted it did not ban enough dodgy financial planners from the scandal-ridden industry and revealed that in the past 10 years it had revoked the licence of just one advice company.

In a scathing indictment of AMP’s culture, Ms Orr pointed the finger of blame at the board and senior management, including general counsel Brian Salter, but stopped short of asking Mr Hayne to find any company officers committed the offences, which carry jail terms of up to five years.

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“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 with a misleading narrative to ASIC,” Ms Orr said. She also recommended Mr Hayne find celebrity financial adviser Sam Henderson’s company, Henderson Maxwell, had committed a crime when it falsely claimed he had a Masters of Commerce and failed to disclose he had a financial interest in a company that administered funds into which he tipped most of his clients.

Kevin Davis, one of the driving forces behind the 2014 Murray ­inquiry into the financial services industry, said there needed to be more serious penalties for executives. “The buck’s got to stop somewhere,” he told The Weekend Australian. “When banks or any institutions get into trouble for certain actions, there’s some people that wear the blame, but it often doesn’t go very far up the organisational chain.”

AMP head of financial advice Jack Regan last week admitted to the royal commission that the company had misled ASIC no fewer than 20 times over the “fee for no service” scandal.

Evidence before the commission also suggested AMP executives put heavy pressure on Clayton Utz, which was compiling an independent report on AMP’s wrongdoing, to downplay the role in the debacle of former advice boss Rob Caprioli and remove Mr Meller’s name from the final document.

It heard Clayton Utz gave AMP 25 drafts of the report, removing Mr Meller’s name so that it would not “attract unnecessary attention to him by ASIC” before at the last moment, inserting a paragraph that exonerated him.

“Having regard to changes made to the report, there is a reasonable basis for concluding that AMP, by one or more of its senior employees or officers, knew that the representation that the report and the findings made within it were entirely independent was materially incorrect,” Ms Orr said.

An AMP spokeswoman said the company acknowledged the seriousness of the closing submissions made by counsel assisting the royal commission yesterday.

“We are reviewing those submissions closely and will respond fully next week,” the spokeswoman said.

“The commissioner will have AMP’s submissions in relation to these matters before making any findings.”

Former Australian Competition & Consumer Commission head Allan Fels said the past two weeks of evidence had proved the worth of the royal commission.

“Every day for the last fortnight at least, there has been a momentous development of historical significance occurring at the royal commission, proving its value,” he said.

Aftershocks from the commission would be felt for years, Professor Fels said.