AMP attempts damage control in wake of royal commission debacle

The AMP board this morning moved to cauterise the damage inflicted by this week’s disastrous royal commission revelations by sacking its CEO, standing aside its most senior lawyer and promising an “immediate, comprehensive review of AMP’s regulatory reporting and governance”.

It ain’t gonna be enough.

The royal commission revealed this week that AMP had been charging some clients fees despite not merely not providing any advice, but not even having planners who could provide such advice. The only saving grace was that it didn’t go as far as the Commonwealth Bank’s Count financial planning group (named after Dracula, perhaps?) which charged clients for years after they died. But AMP also lied to the regulator ASIC about it — repeatedly.

CEO Craig Meller was already in the exit lounge at the company, scheduled to depart at the end of the year. Group General Counsel Brian Slater is in the gun for that dodgy report from Clayton Utz on charging fees for no service that was shopped to the regulator as “independent”. But the real question is what role the board, and the chair, Catherine Brenner, played in altering that report. AMP says it “will be making a submission to the royal commission to respond to the issues raised. The submission will, among other matters, address the issue of the independence of the Clayton Utz report.”

Uh-huh.

Investors are starting to fret and there’s talk of class actions. AMP’s shares are down 10% in the past week alone, with close to $2.5 billion has been wiped off the value of the company this year – with much of that happening in the few days, though shares bounced back 2% this morning after news of Meller’s exit. Meller will be replaced by non-executive director Mike Wilkins on an acting basis — he’s a former CEO of Insurance Australia Group and Promina and a board member at Medibank Private and QBE (is there a conflict of interest there?). 

The problem is, the board remains dominated by people who have failed to change the culture exposed at the royal commission this week. Brenner surely cannot remain and credibly claim to want to rebuild trust in the company’s trashed brand. She and her fellow board members must surely be considering their position.

Meller’s departure is the second of a CEO of our biggest financial companies after a recent scandal. Last year it was Ian Narev at the Commonwealth, who announced his departure in the wake of the money laundering scandal that remains unresolved. That’s one-third of the big six financial corporations of Australia — the four banks, AMP and Macquarie — which are overseen, as Michael Pascoe points out, by the creme de la creme of Australian business in some of the highest-paying directorships in the country. The collective failure by the great and good of corporate Australia in relation to most of our biggest financial corporations (Macquarie, so far, is untainted by the depravity being unearthed by Commissioner Hayne) is staggering — and for which they’ve yet to properly account.

Funnily enough, the usually loquacious folk at the Business Council of Australia have gone silent. The big six are all members of the Business Council. But Jennifer Westacott and Grant King haven’t said boo about the royal commission. No press releases, no op-ed columns, no tweets about the revelations about their members. Why so quiet? It wouldn’t have anything to do with the problem this is creating for the BCA’s campaign for the banks and AMP to be gifted billions via a company tax cut, would it? It wouldn’t have anything to do with how the revelations about AMP and the CBA and all the other surprises to come about other institutions exactly confirm to Australians that their suspicions about large corporations are right?

And it surely won’t have anything to with the fact that while the BCA lectures us about how crucial corporations are to our prosperity and must have their demands met instantly, they’re actually gouging us with virtual impunity from a toothless regulator and paying politicians to run a protection racket for them.

Maybe the BCA can ring Rupert and get another Sky program to address it all.