The CEO of AMP, Craig Meller, is stepping down as the financial giant apologies for its conduct revealed in the financial services royal commission.
“AMP apologises unreservedly for the misconduct and failures in regulatory disclosures in the advice business,” the company said referencing evidence in the royal commission on the fee for no service issue.
“The Board and the Chief Executive Officer, Craig Meller, have agreed that he will step down from his role with immediate effect.”
This week AMP admitted in the royal commission to making false and misleading statements to corporate regulator ASIC about fees it charged customers for advice not given
Meller will lose his proposed latest equity grant, worth about $2.5 million, part of his pay package. This motion will be withdrawn from the AGM agenda.
The 2017 annual report shows Meller was paid $8.32 million. He also has the rights to 858,159 AMP shares, worth about $3.7 million at yesterday’s closing price. The AMP’s 12-member senior executive team shared $40.67 million.
“I am personally devastated by the issues which have been raised publicly this week, particularly by the impact they have had on our customers, employees, planners and shareholders,” says Meller.
“This is not the AMP I know and these are not the actions our customers should expect from the company.
“I do not condone them or the misleading statements made to ASIC. However, as they occurred during my tenure as CEO, I believe that stepping down as CEO is an appropriate measure to begin the work that needs to be done to restore public and regulatory trust in AMP.”
Mike Wilkins, a Non-Executive Director on the AMP Limited Board since September 2016 and a former CEO of IAG Limited, has been appointed as acting Chief Executive Officer until the search for the new CEO is completed.
The financial services giant launched a review of AMP’s regulatory reporting and governance processes to be overseen by a retired judge or equivalent independent expert.
A Board Committee, chaired by Mike Wilkins, has been established to review the issues related to the advice business raised in the Royal Commission. External counsel will be provided by law firm King & Wood Mallesons.
The Group General Counsel, Brian Salter, has agreed to take leave during the review. David Cullen, AMP General Counsel, Governance has been appointed as acting Group General Counsel.
AMP will be making a submission to the Royal Commission to respond to the issues raised. This will
include the issue of the independence of the a report to AMP by Clayton Utz.
“AMP apologises unreservedly for the misconduct and failures in regulatory disclosures in our advice business,” said AMP Chairman Catherine Brenner.
“The Board is determined that we will meet these challenges head on, accelerating changes in both culture and performance at AMP.
“We have been driving much-needed change and improvement in our advice business, which has undergone significant leadership and governance renewal over the past year but we know we have much more to do to.”
AMP says its customer remediation has identified 15,712 customers affected. So far, $4.7 million in fees have been refunded.
Jack Regan, AMP’s Group Executive, Advice and New Zealand, agreed in the Financial Services Royal Commission on Tuesday this week that the company’s culture needed fixing.
In extensive questioning, Michael Hodge, senior counsel assisting the royal commission, pushed Regan about false information given to ASIC.
The questioning revealed more than 20 false or misleading statements by AMP.
Regan also agreed that the company culture at AMP wasn’t “robust” and needed to significantly improve.
“There are reasons to be concerned, they show a culture not as robust as it should be,” he told the commission.
On the company’s risk culture, Regan said there were areas AMP needed to improve significantly.
It starts with culture, it goes to governance, it goes to capability control systems,” he said.
“Culture is the invisible hand that ensures people are making the right decisions.
“It’s evident from what happened here that hasn’t happened in all cases.”
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.