AMP, IOOF share prices swoon as BT Financial cuts super fees amid pressure

About $300m has been wiped from the value of AMP and IOOF after Westpac slashed super fees amid mounting pressure.

A pedestrian is reflected against the indicator board at the Australian Stock Exchange (ASX) in Sydney. Picture: AAP

About $300 million has been wiped from the value of financial services giants AMP and IOOF after Westpac this morning said it would cut some of the fees it charges some superannuation customers amid a series of exposes into the sector.

Westpac this morning said it would take a hit to revenue of up to $70m by reducing super management fees and offer “simple, low capped administration fees” on its BT Panorama products, after The Australian reported serious governance concerns with the banking regulator, including that it has for at least eight years been aware of widespread gouging of super members by Westpac (WBC) and other major financial institutions, but has failed to take any serious action to stop it.

The big four banks, AMP (AMP) and IOOF (IOF) have collectively been reaping billions of dollars a year in excessive fees and charges for managing over 5 million super accounts, and The Australian today revealed six of the nine executive directors of the Australian Prudential Regulation Authority were themselves former senior bankers, with three of those executives appointed to the regulator within weeks of the federal government announcing the Royal Commission into financial services last year.

Shares in the $3.17 billion ASX-listed IOOF Holdings are trading at about $8.90, down 5.1 per cent, while shares in the $10.4bn AMP were down 2.2 per cent, trading at $3.55.

Shares in Hub24 (HUB), another ASX-listed superannuation and funds management company, which has a market capitalisation of $840m, are down just over 6 per cent, with around $50m wiped from its value today.

AMP, IOOF and Hub24 are collectively down about $350m today.

The shares of the major banks were not as heavily impacted as AMP, IOOF and Hub24, despite most still earning substantial revenues from “wealth management” businesses, those businesses comprised a smaller overall proportion of their businesses.

Westpac shares were trading at $29.63 at 3pm (AEST), down 0.89 per cent.

Representatives of Westpac are expected to be among those called to give evidence before the banking royal commission when it starts its public hearings into superannuation in two weeks.

Westpac is the only one of the big four banks to remain committed to its wealth management business with CBA, ANZ and NAB all taking moves to extricate themselves from those businesses, which have collectively made them billions of dollars in recent years.

BT Financial chief executive Brad Cooper today said the group’s changes to some fees would tackle the “complexity” faced by investors, and implied the bank had been charging different fees to different people for similar, or even identical, products.

“There’s all sorts of tiering and different people charging different asset based fees versus admin based fees and so on,” Mr Cooper said. “We’ve come out with a simple transparent price for everybody.”

It is understood the changes will only apply to new customers of its $500m BT Panorama Investments and BT Panorama Super.