04/05/2018 - 09:18

AMP rejects criminal charge recommendation

04/05/2018 - 09:18


Save articles for future reference.
AMP rejects criminal charge recommendation

AMP has revealed almost 16,000 of its customers paid fees for financial advice they did not receive, while arguing it "strenuously denies" recommendations it face criminal charges over the scandal.

Responding to the banking royal commission on Friday, AMP said it could only be of assistance to the Australian Securities and Investments Commission by providing the regulator with a report on the issue prepared by law firm Clayton Utz.

The commission heard the report, which was billed as independent, had been subject to board review before it was handed to the regulator.

"AMP strenuously denies the allegation by counsel assisting that it is open to find that it has committed a criminal offence in providing to Asic in October 2017 a report prepared by Clayton Utz," AMP said in its submissions on Friday. 

AMP also revealed, in its response to submissions made by senior counsel assisting the commission Rowena Orr, that 15,712 customers since 2008 had paid financial advice fees despite not receiving advice.

In most cases, fee charges were the result of administrative error, AMP said, while a minority were cases where charging of fees was authorised.

Last week, Ms Orr outlined a series of possible misconduct findings against AMP for misleading Asic, including breaches of the Corporations Act that carry criminal penalties.

Ms Orr said AMP and its advice businesses misled Asic 20 times from 2015 to 2017 about the nature and extent of its fees-for-no-service practice.

She said there was misconduct around what AMP described as an external and independent report by Clayton Utz on the fees issue, which went through 25 draft versions with changes from the company before being given to Asic.

AMP employees or officers, including former chief executive Craig Meller, former chairman Catherine Brenner, group executive for advice Jack Regan and particularly general counsel Brian Salter, either marked up or suggested amendments, Ms Orr said. 

She concluded the AMP board may have approved the changes to the Clayton Utz report before it was submitted to the regulator last October. 

On Friday, AMP said the report was "uncompromisingly direct and comprehensive" and concerned matters that are subject of an ongoing ASIC investigation that began in 2015. 

"Given the seriousness of the matters being investigated, AMP fully expects that Asic will deal with them in an appropriate manner consistent with Asic's enforcement priorities, and under a proper process, with affected parties having had an opportunity to be heard," AMP said. 

"There is no reason for the commissioner to believe that Asic will not deal with the matter appropriately."

Clayton Utz issued a statement on Friday welcoming AMP's comments that the report was "uncompromisingly direct" and an "important and powerful catalyst" for change at AMP.

Clayton Utz chief executive partner Rob Cutler said the firm's position was always that its investigation into the AMP advice business was at the instruction of the AMP board, and the firm stood by the report's robust findings.

"It is disappointing that it has been misreported that Clayton Utz was in some way involved in misleading Asic," he said.

"That is simply not true. As AMP states, the report is an uncompromisingly direct and comprehensive 87-page review of the conduct of the advice business that could have only been of assistance to ASIC in its investigation, and to counsel assisting in preparing cross-examination.

"The report we prepared was for the AMP board and was the result of an extensive investigation which in fact identified much of the conduct referred to by the commission. At no stage were the findings compromised by AMP or any other person.

“The investigation was undertaken according to the terms of reference set by AMP.  This included that it was to be independent of the advice business and for the purpose of providing legal advice to the AMP board. The report was not prepared for, commissioned by, or addressed to, Asic, and we did not provide it to them." 


Subscription Options