AMP’s reputation in tatters as fee-for-no-service cover-up exposed

AMP’s reputation has been trashed in a day and a half of grubby evidence before the financial services royal commission.

AMP executive Anthony Jack Regan leaves the banking royal commission in Melbourne yesterday. Picture: Stuart McEvoy.

AMP’s reputation as a venerated and trusted institution, painstakingly built up over 169 years, has been trashed in a day and a half of grubby evidence before the financial services royal commission.

The late US president Richard Nixon can attest that it’s ultimately the cover-up — and not the crime — that really matters.

It was a version of Watergate that sprang to mind yesterday as senior counsel assisting Michael Hodge’s official count of the number of times AMP had misled ASIC over its fee-for-no-advice scandal clicked past 20, and evidence was presented that law firm Clayton Utz had shared 25 drafts of its 2017 “independent” report on the practice with AMP.

The commission heard that AMP chair Catherine Brenner went into bat for chief executive Craig Meller before the board settled on the final version of the ­report.

In an October 11, 2017 email sent by AMP group counsel Brian Salter to Clayton Utz partner Nicholas Mavrakis, Brenner asked for the inclusion of a statement that Meller was “unaware of the practices or their illegality”.

AMP believed Meller had not seen internal legal advice that the practice was illegal, and had not been involved in communications with ASIC after a breach report was lodged with the watchdog in 2015.

Four days later, in an email to Salter, Brenner asked for some talking points on Meller for a scheduled meeting with ASIC chair Greg Medcraft, and others, to present the final Clayton Utz ­report.

“Has Clayton Utz now included in their report that we will give to ASIC their findings on Craig?” the AMP chair asked in an email copied to Meller.

Salter forwarded the question to Mavrakis.

The commission heard there were two unusual aspects to the email.

First, it was not sent to AMP group executive, advice, Jack Regan, despite his status as one of only two people in the group with day-to-day dealings with Clayton Utz.

Asked for his response, Regan, under cross-examination yesterday for a second consecutive day, said that the report was “substantially settled by the board”, the general counsel and Clayton Utz.

The second unusual aspect was the level of interaction between AMP and Clayton Utz.

After further evidence of more exchanges between the company and the law firm, Regan agreed he had a “level of discomfort” about representing the report as independent to ASIC because of the “significant amount of interchange” between AMP and Mavrakis. Hodge asked Regan if Mavrakis could have been in any doubt whatsoever about the preferred Clayton Utz outcomes by AMP’s most senior people.

“That’s up to Mr Mavrakis to determine,” Regan said.

Commissioner Kenneth Hayne clearly had concerns about AMP’s degree of influence.

In yet another bombshell shortly before the commission adjourned, Hayne acknowledged there might be questions about the role of AMP senior management and others in a report that was ­submitted to ASIC as independent.

“It is a matter for AMP and its advisers whether it seeks to have some opportunity to provide any material which goes beyond the evidence given by Mr Regan about that matter and the documents that tendered in relation to it,” the commissioner said. Suffice to say that AMP has a target plastered all over its back after yesterday’s damning evidence.

Against an otherwise solid performance by the overall market, the company’s share price sagged 4.4 per cent.

Brenner said last month that Meller would step down before the end of the year, but the CEO is now hanging by a thread. Serious governance concerns have also rocked the board, raising questions about Brenner’s future.

Canberra has had a lot of fun kicking the banks around, and inevitably there will be more to come before Hayne hands in his final report next February.

But as things currently stand, it’s AMP that has shown the most pressing need for a radical overhaul of its culture.

Yes, much of the behaviour is historical, but Brenner, her fellow directors and senior management bear responsibility for the way the misconduct has been handled.

Regan, who was appointed in January last year to clean up the mess, has emerged with his reputation mostly intact, and yesterday offered his own thoughts on organisational culture.

Asked about the culture of AMP’s advice business, he said it wasn’t as robust as it should be.

He agreed with Hodge that a conscious decision had been made to protect profitability at the possible expense of AMP’s licence.

“But I think there are other elements that are concerning as well,” Regan said. “I think there is clearly a lack of clarity in terms of the way directions are being given, but also there’s a concern about the degree to which things should have been escalated as a result of the things identified further down.”

Had profitability also been prioritised at the expense of the law, Hodge asked. “Absolutely,” Regan said. “Absolutely.”