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FILE PHOTO: The logo of AMP Ltd, Australia’s biggest retail wealth manager, adorns their head office located in central Sydney, Australia, May 5, 2017. REUTERS/David Gray
November 8, 2018
By Byron Kaye and Paulina Duran
SYDNEY (Reuters) – Struggling Australian wealth manager AMP Ltd <AMP.AX> fears any new regulation of the finance sector would “distract” participants from acting ethically, it said on Thursday, striking a defiant tone after months of damaging allegations.
The country’s biggest-listed wealth manager also rejected suggestions that Australia’s largest financial firms had failed to make sufficient effort to stop charging customers fees without providing services.
The comments came in an unusually combative reply to a scathing interim report on the conduct of Australia’s financial industry from a government inquiry which has shocked the country with revelations of widespread wrongdoing. Most of the major banks have said they will support any new laws.
“There is every chance that adding a new layer of law and regulation would serve only to distract attention from the very simple ideas that must inform the conduct of financial services entities,” AMP said in a written response to the Royal Commission’s interim report.
“The more complicated the law, the easier it is to lose sight of them,” AMP added.
The independent Royal Commission inquiry is widely expected to recommend sweeping reforms to financial services regulation when it wraps up in February.
It has heard evidence of poor governance and misconduct including the taking fees from dead people’s accounts, forging signatures to sell loans to small businesses, and forcing farmers into insolvency to avoid exposure to drought.
AMP admitted to charging customers fees without providing a service, then tampering with a supposedly independent report to a regulator about the practice. The firm’s CEO, chairwoman and several directors stepped down following the revelations.
The firm’s shares are down 50 percent since the start the year, wiping A$7.5 billion ($5.5 billion) from its market value.
The 170-year-old company now faces five class-action lawsuits on behalf of shareholders, an Australian record.
AMP defended its business model, saying that the fees it charged to invest people’s retirement savings left customers better off. The Royal Commission has heard that low-fee-charging default industry funds routinely return more money to policyholders than fee-charging private funds like AMP.
A ban on pension fund fees “would have a significant negative impact on customers and result in unintended detrimental consequences including making financial advice less affordable … to those who need it most”, AMP said.
The company also rebuked the Australian Securities and Investments Commission (ASIC), the corporate regulator, saying there was an “inherent conflict of interest in relation to ASIC receiving the fines … that they impose on the financial services sector”.
The Royal Commission resumes hearings later this month.
(Reporting by Byron Kaye and Paulina Duran; Editing by Stephen Coates)