ASIC plans to file AMP Federal Court case ‘by year-end’

ASIC deputy chair Daniel Crennan confirmed the regulator was investigating “a number of matters” related to AMP.

Chair of ASIC James Shipton and Deputy Chair Karen Chester. Picture: Gary Ramage

The corporate regulator expects to file a case in the Federal Court against AMP by the end of the year following its investigations into the wealth giant stemming from the Hayne royal commission.

Appearing before the House Standing Committee on Economics on Wednesday, ASIC deputy chair Daniel Crennan confirmed the regulator was investigating “a number of matters” related to AMP.

Declining to give an exact figure, it was “more than five and less than 50. Significantly less than 50,” he told the committee.

He expects matters to be filed in court by the end of the year, he said.

ASIC’s investigations into the wealth giant include the fee-for-no-service scandal exposed at the financial services royal commission in 2018, which claimed the scalps of its chief executive and chairman and left AMP with an $800m remediation bill.

AMP last week said its remediation program was on track and was expected to be 80 per cent complete by the end of the year.

The wealth manager has also been hit with two class actions in recent weeks, one from its aligned advisers over its controversial decision to slash the amount it would pay them for their businesses and another by customers who say the wealth giant charged excessive insurance premiums.

The regulator has in recent months come under pressure to scrutinise AMP’s decision to abruptly alter its buyer of last resort policy, which reduced the amount it would pay its advisers for their businesses from four times recurring revenue to 2.5 times.

But ASIC chair James Shipton last month said AMP’s strategy was not the “jurisdiction” of the corporate regulator.

Under a grilling from the committee, the regulator also expressed its frustrations over delays by banks to complete their remediation programs, with ASIC deputy chair Karen Chester repeatedly arguing that the regulator was not to blame for financial institutions dragging their feet on close to $3bn in refunds.

Ms Chester confirmed just $800m had so far been paid out by banks and other financial services companies through the 89 remediation programs it is currently overseeing, with a further $2.9bn still to be refunded to customers.

Facing questions on ASIC’s role in the delay to the refunds still to be paid, Ms Chester said the regulator assisted and provided guidance to companies working on remediation programs but confirmed they did not need ASIC’s agreement to proceed.

“The key driver for delays are two fold: one, the decision of the entities in how they approach the remediation program; and secondly, with many of the fee for no service programs there is a dearth of efficacy in the data of the systems because of the age of the conduct, the distribution channels and the record keeping that were used,” she said.

“There’s nothing we’re holding up here … ASIC does not sign off on remediation programs. Institutions sometimes like to know they have our informal blessing but we do not sign off on these.

“The banks and insurers and advisers do not need ASIC’s impremada to complete these remediation programs.”

Ultimate responsibility for the programs resided with the company boards, she said.

ASIC was frustrated with the pace of the remediation programs, Ms Chester said.

“We are seeing some signs of green shoots in terms of the approach and the culture within some of the larger institutions but we will be setting out very clearly (in a new guide) what our expectations are for the remediation programs going forward.”

The new guide will empower financial institutions to satisfy community standards and expectations, she said.