The chair might have resigned but the trouble is far from over for AMP

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  • The pain is far from over for AMP as it prepares to face shareholders at the AGM next week.
  • The board of the financial services giant has also foreshadowed more may lose their jobs from the fee for no service scandal.
  • And still to come later this year is the recommendations from the financial services royal commission.

The fallout for AMP from the wrongdoing of its financial planners is only just starting despite cleaning out the ranks of its senior leadership, including the chair, CEO and general counsel.

The financial services giant faces its shareholders next week at the AGM, several legal firms are preparing possible class actions, the recommendations from the royal commission are still to come later this year and then there’s the possibility of additional political fall-out from the federal budget next week.

Today AMP chair Catherine Brenner resigned, following CEO Craig Meller, who stepped down earlier this month following evidence in the financial services commission that AMP gave false information to corporate regulator ASIC.

The AMP board of directors also announced that all directors will have their fees reduced by 25%. Fees range from $659,800 for the chairman to $198,300 for a non executive director, according to the 2017 annual report.

AMP has also raised the prospect of sackings ahead. “The employment and remuneration consequences for the individuals within the business responsible for the fee for no service issue will be determined on finalisation of an ongoing external employment review, which is expected to complete shortly,” the board of directors said.

Prime Minister Malcolm Turnbull says Brenner did the right thing to resign as chair of AMP, saying there are “matters of very great concern”.

“I just want to make it very, very clear, my commitment and the government’s commitment is to ensure that the wrongdoing that we have seen does not happen again and we make sure that it can’t happen again and that those who have done the wrong thing are held to account,” he says.

“Every institution and every board of directors — which is ultimately the body that governs these institutions, the peak of their management structure — have got to take responsibility for what has gone on.”

The financial services royal commission last week raised the prospect of proceedings under the Corporations Act following admissions from AMP that it made false and misleading statements to ASIC

Evidence at the commission showed AMP made 20 false or misleading statements or representations in 12 communications to ASIC about the extent and nature of the problem of charging customers for financial planning advice they didn’t receive.

The royal commission was also told that a draft so-called independent report from Clayton Utz was changed 25 times, at the request of AMP, apparently to hide involvement by senior executives in the fee-for-no-service “misconduct”.

“The evidence also supports a finding that AMP and its licensees did not adequately respond to the detriment suffered by the clients of the advisers considered in the case study,” Rowena Orr, senior counsel assisting the commission, said.

However, today the AMP board said it has sought legal advice about the Clayton Utz report.

“Having considered and assessed the matters, the board is satisfied that the former Chairman Catherine Brenner, former Chief Executive Officer Craig Meller and the other directors did not act inappropriately in relation to the preparation of the Clayton Utz report,” the board said.

“The board, including the former Chairman, were unaware of and disappointed about the number of drafts and the extent of the Group General Counsel’s interaction with Clayton Utz during the preparation of the report.”

The company’s general counsel, Brian Salter, has also left the company and will forfeit his bonus.

The Australian Shareholders’ Association says it will wield “a significant number of proxies” next Thursday (May 10) at the AGM of AMP shareholders.

The association says it will vote against at least two of the three directors up for election. It will also vote against the remuneration report.

“Both Holly Kramer and Vanessa Wallace were on the AMP Board when there was the delay in reporting breaches to ASIC; the alleged interference with the independent report took place; and the Board decided that the breaches that occurred in the wealth division did not necessitate a comprehensive external review,” the association says.

The association has reserved judgment on whether to vote for or against the third director, Andrew Harmos, who came onto the board in June 2017.

“The Royal Commission is raising serious concerns about the quality of oversight that AMP’s directors were exercising in relation to its businesses, reputation, and the corporate culture,” says Allan Goldin, NSW Company Monitoring Committee chairman.

“AMP must urgently appoint some additional well credentialled, untainted people to the board irrespective of the voting results at the AGM.”

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