On Monday evening (23 July), the Australian Broadcasting Corporation (ABC) ran a Four Corners report entitled Money for Nothing: How corporate greed and deception cost AMP its trusted place in Australian life.
The show looked at how AMP’s reputation had been left “in tatters” following evidence before the financial services royal commission that it charged customers fees for no service and repeatedly lied about it to the corporate regulator.
During the second round of hearings, the senior counsel assisting the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry suggested that criminal prosecution against AMP be initiated following evidence of misconduct.
Four Corners report details
Featuring snippets from the royal commission hearings, the Four Corners report included an interview with a former AMP financial planning licensee and whistleblower, Brett Strong, who alleged that AMP was pressuring financial planners to sell in-house AMP products even if it meant a client would be financially worse off.
Mr Strong, who was a self-employed adviser and licensed by AMP Financial Planning for 14 months between 5 June 2013 and 5 August 2014, told ABC that he had noticed that some of his clients were being charged for services that weren’t being delivered.
He said: “Every month, you would see the adviser fee. And it didn’t matter how long you went back; that adviser fee was there monthly, being taken out of those super funds or those policies.
“To me, when you ring the client and they say, ‘Who are you? Where you come from?’, and you tell them that you’re from AMP and they say, ‘Well, I haven’t heard from anyone from AMP for 15 years, or 20 years, when someone knocked on my door and sold me a policy.’
“That to me smells very, very bad. It made us feel very, very uncomfortable.”
Mr Strong went on to allege that AMP was “trying to get [his] existing book of business over to their particular products and services”, which could have left some clients thousands of dollars a year worse off, and that when he refused, he was reprimanded.
The former adviser told Four Corners: “They went through the process of explaining to me why I wasn’t fitting into the AMP culture, and that I was not a very good adviser because I was not performing.
“That was quite earth-shattering.”
Eventually, Mr Strong said that he handed back his AMP licence.
The Four Corners program went on to review the “independent investigation into fees for no service by law firm Clayton Utz”, which was brought to light during the royal commission hearings earlier this year.
According to ABC, the report “underwent 25 drafts as it was shuttled between Clayton Utz and AMP”.
The program also outlined that AMP shareholders are now being courted by five competing law firms for a class action potentially worth hundreds of millions of dollars. AMP said this week that it will “vigorously defend” the class action being brought against it by Quinn Emanuel Urquhart & Sullivan.
Following the airing of the Four Corners show last night, AMP highlighted that Mr Strong resigned “after AMP notified Mr Strong of compliance issues including certain advice”.
“He resigned in March 2014… His authorisation was terminated by AMP in August of the same year,” AMP’s statement read.
AMP has said that it will review Mr Strong’s allegations to the Four Corners program and noted that its advisers are able to advise on both AMP and non-AMP products.
“They have a legal obligation to only recommend a new product when it is in their client’s best interests,” the beleaguered wealth giant said.
It has also said that it “encourages” any advisers or employees who have “witnessed behaviours they believe don’t put customers’ interests first to come forward with their concerns”.
Adding that this could be done formally or through anonymous whistleblower channels, AMP said that “all concerns raised will be taken seriously”.
Touching on the Clayton Utz report, AMP’s statement reiterated its submission to the royal commission that the Clayton Utz report “could never have been considered as independent” under ASIC’s regulatory guidance, and that it was “nonetheless... an uncompromisingly direct report into the issues”.
“ASIC was fully aware that Clayton Utz is a member of AMP’s external legal panel and was acting for AMP in relation to ASIC’s investigation into fees for no service,” AMP said.
The statement continued: “AMP acknowledges and has apologised unreservedly for the past misconduct and failures in regulatory disclosures in its advice business.
“We have admitted we let down our customers and we are now working hard to make significant improvements across the business to ensure our focus is firmly on helping and supporting our customers.”
The group said that it was “strengthening” its processes and governance in financial advice, and it was “working to accelerate the compensation of customers who received inappropriate advice or were charged fees incorrectly”.
It added: “Under the leadership of our new chairman, David Murray, we are committed to cultural changes across AMP.
“We know this is critical if we are to earn back the trust of our customers, employees, advisers, shareholders and the broader community.
“And we will do whatever it takes to regain this trust.”
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.