Ever since the Royal Commission into the banking and finance sector financial services business AMP (ASX: AMP) has been on the back foot.
Now, new legislation is causing the company to lose more money than it is bringing in.
According to the group's Q3 update, the group's wealth management business saw cash inflows of $7.1 billion, which was offset by $9 billion of outflows, resulting in net cash outflows of $1.9 billion.
The $9 billion of outflows was the result of $600 million in regular pension payments to AMP's clients and $200 million due to the introduction of the Protecting Your Super legislation.
AMP chief executive Francesco De Ferrari says these teething issues are part of the group's reinvention.
"Each of our businesses performed broadly as expected during the third quarter," says De Ferrari.
"Australian wealth management is taking significant steps to reinvent its business model, building a business around client needs. We have achieved stronger inflows during Q3, reflecting our improved fee competitiveness, but also higher outflows as the new Protecting Your Super legislation was implemented in Australia."
At the end of Q3 AMP's wealth management business had $133.2 billion assets under management (AUM), while AMP Capital's AUM increased to $202.2 billion.
Elsewhere in the business, AMP Bank's deposits increased by $600 million, and its total loan book grew by $100 million to $20.3 billion.
New Zealand wealth management's AUM was down slightly at $11.8 billion for the period which the company attributes to a weaker New Zealand dollar.
The Q3 report follows a Sydney Morning Herald story detailing how AMP's senior lawyer responsible for exposing AMP's fees for no services scandal is suing the financial services business alleging she was bullied, harassed, and unfairly sacked.
According to court documents obtained by The Sydney Morning Herald, Larissa Baker Cook alleges she was subjected to "hostile, aggressive and intimidating behaviour" by colleagues which led to her termination from AMP in June.
The NSW Federal Court will hear a case management hearing on 3 December 2019.
Shares in AMP are up 2.91 per cent to $1.84 per share at 11.03am AEDT.
Business News Australia
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