Senior counsel assisting the commission Rowena Orr QC made the suggestion during the closing remarks for the royal commission’s financial advice and wealth management hearings.
Turning first to the evidence of AMP Group executive, advice and NZ Jack Regan, Ms Orr said that the executive had admitted to conduct that was “unlawful and ethically and morally wrong”.
Ms Orr said: “Why has it placed such emphasis on the question of whether an employee or executive received legal advice explaining that it was unlawful to charge for fees for no service? While the receipt of such advice might be an aggravating factor in the culpability of an individual, it is difficult to understand why so many employees and executives at AMP were unable to recognise something that was plain to Mr Regan, namely, that to charge fees for services that will not and cannot be provided is unlawful and ethically and morally wrong.”
She reminded the commission that AMP has made “20 false and misleading statements in 12 communications” to ASIC, which is tantamount to breaches of both the Corporations Act and ASIC Act.
Ms Orr described AMP’s claims that Clayton Utz’s review of its BOLR policy was “independent”, was “materially incorrect” and intended to deceive the regulator.
She described the conduct of AMP as “unconscionable”.
A number of the contraventions listed by Ms Orr carry criminal penalties.
“It is open to the commissioner to find that this conduct is attributable, at least in part, to the culture [of AMP],” Ms Orr concluded.
The suggestions follow on from changes brought in last week billed as the “most significant increases to the maximum civil penalties in more than 20 years”.
The federal government recently announced plans to reform the Corporations Act to increase criminal penalties for misconduct.
The Turnbull government has said that it is “strengthening” criminal and civil penalties for corporate misconduct and boosting the po
wers of the Australian Securities and Investments Commission (ASIC) to protect Australian consumers from corporate and financial misconduct. It will “increase and harmonise” penalties for the most serious criminal offences under the Corporations Act to a maximum of:
- For individuals: (i) 10 years’ imprisonment; and/or (ii) the larger of $945,000 OR three times the benefits;
- For corporations: (i) the larger of $9.45 million OR (ii) three times benefits OR 10 per cent of annual turnover.
Previously, the maximum prison term for individuals was five years.
The government will also expand the range of contraventions subject to civil penalties and will also increase the civil penalty amounts that can be imposed by courts to the maximum of:
- the greater of $1.05 million (for individuals, from $200,000) and $10.5 million (for corporations, from $1 million); or
- three times the benefit gained or loss avoided; or
- 10 per cent of the annual turnover (for corporations).
In addition, ASIC will be able to seek additional remedies to strip wrongdoers of profits illegally obtained or losses avoided from contraventions resulting in civil penalty proceedings. The crackdown comes after Mr Morrison has slammed AMP for misleading ASIC amid revelations of “deeply disturbing” misconduct by its staff, highlighting that such behaviour could attract jail time.
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.