Treasurer Scott Morrison says revelations that AMP misled the corporate regulator and its own customers are “deeply disturbing,” warning that such behaviour can be punished by jail time.
After a two-day grilling of AMP over its charging of clients for financial advice that was not provided, which has triggered a sharp slide in its share price, Mr Morrison on Wednesday said the Australian Securities and Investments Commission had already been investigating the matter.
A top AMP executive on Tuesday admitted the wealth giant had misled ASIC 20 times over an issue known as “fees for no service,” which has also affected the big four banks.
Although the hearings are likely to raise questions over ASIC’s strength as a regulator, Mr Morrison said he was confident ASIC would continue to “deal with” the matter.
“I mean, what has occurred here and what has been admitted to in the royal commission by AMP is deeply disturbing. They have said that they basically charged people for services they didn’t provide and they have admitted to statements that were misleading – to ASIC and to their own customers, and this is deeply distressing,” Mr Morrison said at a press conference in Sydney.
“This type of behaviour can attract penalties which include jail time. That’s how serious these things are.”
“I am very reassured by the fact that these matters were already being pursued by ASIC and will continue to be pursued by ASIC.”
ASIC is expected to comment on the issue later today.
The revelations regarding AMP triggered a 4.4 per cent slide in the company’s share price on Tuesday, with the stock falling a further 1.4 per cent by mid-Wednesday, to $4.48, the lowest since September 2009.
Shaw and Partners Stockbroking analyst Brett Le Mesurier said he was “horrified” by AMP’s misleading statements to ASIC, and the revelations could have long-lasting consequences for the financial services company, which was already grappling with a decline in its number of advisers.
“The problem they’ve got is dwindling adviser numbers, which means they have to make sure their clients are advised by someone,” Mr Le Mesurier said.
“They’ve been looking to supplement human advice with robo-advice, but I don’t know how that fits with the current environment where you’re supposed to know about your customer’s best interests.”
The revelations could also be “negative” for its direct sales of wealth products to consumers, though the extent of this was hard to quantify, Mr Le Mesurier said.
The royal commission is scheduled to spend this week and next on the financial advice sector, and Mr Le Mesurier also raised the question of what else might be uncovered if it had more time.
“We have 20 examples from 1 ½ days questioning. What if the royal commission had more time to devote to them? “
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