AMP has published a 28 page response to the issues raised by the Royal Commission. They make the point that the fees for no service issue is old news. In addition, they down play the preparation of a Clayton Utz report into the issue and the firms misleading representations to ASIC.
They did unreservedly apologise for their financial advice failings relating to service delivery to customers and spoke about extensive action aims to ensure these issues “never happen again.”
Fees for no service is old news
The wealth management giant said fees for no service is an industry-wide issue and AMP has been the subject of an ongoing ASIC investigation since 2015. As part of the investigation, extensive details were disclosed to the regulator in October 2017, AMP said.
Fees for no service include instances where AMP charged fees due to an administrative error and through the practice of retaining fees during buy back arrangements known as “ring-fencing” and “the 90-day exception”.
“Between 2010 and 2016, of the 2417 register transactions that took place, 39 were Buyer Of Last Resort (BOLR) transactions which involved application of the 90-day exception,” the AMP submission said.”We have apologised to and refunded the fees to all customers impacted by the 90-day exception. The remediation totalled $850,000. To date, for the broader licensee fees for no service issue, we have remediated 15,712 customers, a total of $4.7 million.”
AMP acknowledged the process has been too slow and is committing additional resources to accelerate remediation.
The Clayton Utz report
AMP has reiterated to the Royal Commission that there is no evidence to suggest its board, including the former chairman and former chief executive, acted inappropriately in relation to the preparation of the a Clayton Utz report into fees for no service.
The board commissioned the report on 5 June 2017. It entailed interviews with 27 current and former employees, and a review of documents, AMP said.
“The report is an uncompromisingly direct 87-page review of the conduct of the advice business in relation to fee for no service matters,” 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 it did not agree with or that it did not stand behind the report.
“The extent of interaction between AMP and Clayton Utz has been overstated,” AMP said.
Misleading ASIC
AMP has accepted its communications to ASIC have been misleading. The communications regarded fees of certain customers not being switched off in connection with adviser buy-back arrangements and the 90-day exception.
“AMP accepts that any misrepresentation, even if inadvertent, to ASIC is unacceptable and must be corrected as soon as it becomes apparent. However, the number of separate misrepresentations referred to in the Royal Commission has been overstated,” it said.
“There were seven misrepresentations (in 12 communications). These were not new ‘news’. We had reported them in detail to ASIC in October 2017 and then to the Royal Commission.”
In terms of accountability, AMP pointed to its chief executive and chair stepping down; board directors taking a 25% pay cut for the remainder of 2018; and the strengthening of its advice governance framework in 2017 among other internal measures.
