AMP deliberately misled ASIC over ongoing fees

Once again in the Royal Commission hot-seat, AMP advice head Anthony Regan conceded evidence suggests the business deliberately misled ASIC over ongoing fees-for-no-service policies on multiple occasions.

Senior Counsel Assisting Michael Hodge singled out AMP's 90-day exception rule, whereby the business would continue to charge clients fees while they had been transitioned into a BOLR pool. Under this arrangement, clients would continue to be charged fees while they were not receiving services for up to 90 days.

Hodge pointed out that on numerous occasions AMP had communicated to ASIC that this was an "administrative error" rather than a deliberate business policy, and that it had only become aware of the situation after investigating it - even though previous statements contradicted this.

Hodge noted that based on an internal chain of emails between AMP employees, fees would not be left "on" unless there was joint approval by senior staff.

"[These emails] suggest that there was a common understanding amongst a number of different teams at AMP that there had been a separate practice of ring-fencing going on throughout the period after 2015," Hodge said.

"Yes, I think that's correct," Regan responded.

Hodge said based on a Clayton Utz report, AMP formulated a view to describe the 90-day rule as an "administrative issue" to ASIC, rather than compensation based on no advice. The report also said that AMP sought to negotiate a commercial outcome with ASIC with respect to the scope of compensation payable to customers.

Regan broadly agreed with the findings of the report, but argued that there had been "equivocation" with respect to legal advice on the matter.

"The equivocation was that the rule 'should' be investigated, when I think it should have been reviewed and escalated much more significantly than it was. It should have been investigated through the legal process as much as the business process," Regan said.

Hodge also noted that AMP would dial down fees for orphaned clients rather than issue a disclosure statement not because said clients were being charged fees for no service, but that a disclosure statement might prompt the client to cancel an ongoing fee and potentially lodge a complaint with ASIC, and that this would be a "negative customer experience."

Regan agreed.

Read more: AMPASICAnthony ReganRoyal CommissionClayton UtzFinancial adviceMichael Hodge
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