AMP Australia apologises for misconduct, CEO steps down

Financial services giant AMP has issued an unreserved apology for its misconduct and failures in regulatory disclosures in Australia. AMP’s chief executive officer in Australia, Craig Meller, will step down from his post effective immediately.

“AMP apologises unreservedly for the misconduct and failures in regulatory disclosures in our advice business,” AMP chairman Catherine Brenner said. “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.”

Meller, meanwhile, said: “I am honoured to have been the CEO of AMP. 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.”

The company has appointed Mike Wilkins as acting CEO until the search for a new one is completed. Wilkins has been a non-executive director on the AMP Board since September 2016.

To accelerate necessary change, AMP also announced the following actions within the organisation:

• Undertake an immediate, comprehensive review of AMP’s regulatory reporting and governance processes – a retired judge or equivalent independent expert will be appointed imminently to oversee the work.
• A board committee has been established to review the issues related to the advice business raised in the Royal Commission. The committee is chaired by Mike Wilkins and will act with the assistance of external counsel, King & Wood Mallesons.
• The group general counsel Brian Salter has agreed to take leave while the review is undertaken. David Cullen, AMP General Counsel, Governance will be the acting group general counsel.
• AMP will be making a submission to the Royal Commission to respond to the issues raised.
• The company’s board will withdraw resolution four from its Notice of Meeting to the 2018 Annual General Meeting, which relates to an equity grant for the chief executive officer.

Other works that are underway include:

• Customer remediation, with the program well progressed and 15,712 customers identified and $4.7 million fees refunded to date.
• An external review to ensure all fee for no service business practices have ceased. This review is now complete and has confirmed that the practices ceased in November 2016.
• An independent investigation into employee conduct. Based on the review’s findings, the board will determine the employment and remuneration implications for any relevant individuals around the fee for no service matter.

• A review and complete overhaul of governance, systems and processes in the advice business.
• An enterprise-wide cultural audit conducted by an external consultant.
• An enterprise-wide review of risk governance, controls and culture also conducted by an external consultant.

Of note, AMP’s business in New Zealand is in no way impacted or linked to the misconduct. It issued the following statement to Insurance Business.

“In New Zealand, we operate within a different regulatory and governance framework, with different operating and distribution models,” it said. “We continue to maintain an open and transparent relationship with New Zealand regulators – the FMA and RBNZ.”