- The royal commission today summarised breaches of the Corporations Act by AMP and the Commonwealth Bank.
- Catherine Brenner, the chair of AMP, was named by Rowena Orr, senior counsel assisting the commission, in a criticism of the financial services giant’s culture.
- And at the Commonwealth Bank, Orr says, culture was one of maximising revenue from customers rather than providing advice.
The financial services commission is heading to calling out AMP and the Commonwealth Bank for breaking the law on multiple occasions, putting maximising revenue ahead of customer welfare.
Senior managers at AMP knew that charging fees without providing a service was a breach of the law but this continued even after it had reported it to the corporate regulator ASIC, the commission heard today.
And royal commission senior counsel say the absence of a compliance culture at the financial services reached to the top of the company, including now former CEO Craig Meller and chair Catherine Brenner.
Rowena Orr, senior counsel assisting the commission, today summed up a range of case studies presented to the commission, including that of AMP which admitted giving false and misleading information to ASIC.
Orr says senior management knew of the breaches but the practice of charging for no service continued, until at least January last year, long after it was first reported to ASIC in 2009.
CEO Meller has resigned and the company has apologised after admitting in the royal commission to making false and misleading statements to ASIC.
Law firm Slater and Gordon has since partnered with global litigation funder Therium to look at a massive class action.
Orr, in her address today, raised the issue of AMP’s culture starting at the top, with its now former CEO and the current chair Catherine Brenner.
Brenner also faces calls, including from the Australian Shareholders Association, to resign.
Orr referred to changes made to a report written by law firm Clayton Utz which appeared aimed at limiting findings about the knowledge of senior executives of the fee-for-no-service “misconduct”.
“It reflects the absence of a compliance culture and a persistent and prevalent attitude at a very high level in AMP to deal with ASIC other than frankly and candidly,” she says.
Orr turned her attention to the Commonwealth Bank which she says breached multiple provisions of corporate law by charging fees for services it did not provide.
And managers at the bank knew about the breaches 18 months before ASIC was told.
Orr says the royal commissioner, Kenneth Hayne, could find that the bank had a culture of tolerance of conduct detrimental to clients.
It was all about maximising revenue streams rather than providing advice, she says.
Orr turned her attention to Westpac and the case of a nurse and her husband who ended up without a home after going to see a bank financial adviser.
That financial adviser, Krish Mahadevan, was still employed by BT Financial, Westpac has confirmed to the Royal Commission.
Orr says it is open to the commission to find that Westpac may have breached its obligations under the Corporations Act.
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