AMP begins the long claw-back, profits to suffer from scandal

AMP begins the long claw-back, profits to suffer from scandal

Financial provider AMP has today revealed its business recovery plan in the first quarterly update since its spectacular fall from grace during the Financial Services Royal Commission.

AMP has vowed to "reset the business" which, in April this year, admitted to deliberately and unlawfully charging its customers for services that were never provided.

Acting CEO Mike Wilkins says AMP will be "facing squarely" into the issues that have impacted its reputation and community attitudes toward the bank.

"Today's announcement reflects our commitment to take decisive action to reset AMP and establish a platform from which the business can recover rapidly," says Wilkins, who took over as acting CEO when Craig Meller resigned after the scandal first surfaced.

"This remediation program is complex as it will address both employed and aligned advisers, and we understand it is one of the first programs to do so We know it will take time to earn back trust."

In the short term, AMP says it will focus on speedy remediation for customers who were wronged by its misconduct.

It also plans to reduce fees for its super customers, invest an increased $35 million per annum to upgrade risk management and compliance controls in addition to reprioritising its portfolio capital growth.

The company expects to deliver its underlying profit to June 30 in the range of $490-500 million, a result heavily impacted by the $290 million paid in remediation to its cheated customers.

AMP's oath to turn over a new leaf comes just days after Four Corners released its in-depth report into the scandal which rocked the bank's foundations and shaved more than $2 billion off its market value.

It also follows an onslaught of class action lawsuits brought by aggrieved shareholders who watched the bank's share price plummet on misconduct revelations.

Shareholder advocate Stephen Mayne told Four Corners that the "revolving door of chairs, CEOs and Directors" coupled with the group's actions, both recent and in the past, have caused serious and lasting damage.

"We've been hearing this for years for AMP, we're sick of the board coups, and the tumult, and the fact that the business has been a shocking performer for shareholders and they haven't fixed the fundamental problems," says Mayne.

Ben Hardwick of Slater and Gordon Lawyers, one of the firms acting against AMP on behalf of shareholders, echoed Mayne's sentiment and explained the crux of the bank's recent upheaval.

"For AMP, lists of clients who used its financial planning services were assets that could be traded," explained Hardwick to Four Corners.

"In circumstances where a financial planner retired or moved occupation, that left a client without a financial planner.

"Now rather than stop charging fees for service, what AMP did was continue to charge fees for service in circumstances where no services were being provided."

AMP shares have dipped by 3.59 per cent and are trading at $3.35 at the time of writing (11:08am AEST).

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Employee resilience is key to business resilience
Partner Content
Employee mental health and wellbeing is top of mind for Australian businesses, and or...
Aon
Advertisement

Related Stories

Online sourcing hub Foodbomb heats up with $4.5m raise

Online sourcing hub Foodbomb heats up with $4.5m raise

Described as "essential infrastructure" for hospitality...

Hunter and Newcastle in lockdown from 5pm today as COVID spreads into regional NSW

Hunter and Newcastle in lockdown from 5pm today as COVID spreads into regional NSW

Eight local government areas (LGAs) in the Hunter and Upper Hunte...

Nick Scali profits double as online sales spike six-fold

Nick Scali profits double as online sales spike six-fold

Furniture retailer Nick Scali (ASX: NCK) has doubled its net prof...

From $1m to $273m raised: Five lessons in five years on the board of a new unicorn company

From $1m to $273m raised: Five lessons in five years on the board of a new unicorn company

It's been five years on the board of Go1, and last month they...