The embattled financial institution has announced today that expected underlying profit for the financial year 2017-18 to be in the range of $490-500 million, stemming from what the company says in resilient growth in its core businesses.
A statement to the ASX reveals that the “net profit attributable to shareholders is expected to include a provision of $290 million (post-tax) for potential advice remediation”, following a decision to “accelerate” the process for compensating victims of dodgy advice.
ifa understands that the advice remediation figure will affect the company’s overall net profit and will be paid from AMP’s capital surplus, which the statement describes as “solid”.
The statement also announces fee reductions for its MySuper products, which will impact 700,000 customers.
AMP acting chief executive Mike Wilkins said the acceleration of the remediation process is evidence the company is taking the charges and criticism levelled against it seriously.
“Customer needs are our immediate priority, as we firmly believe this will also best serve the long-term interests of shareholders,” Mr Wilkins explained.
“We know it will take time to earn back trust, however today is an important milestone in that process.”
The remediation process is “complex”, he said, as it will pertain to both employed advisers and those within AMP’s expansive (if declining) network of self-employed authorised representatives.
In addition to the payouts to aggrieved customers, the remediation program itself is expected to cost the company $50 million per annum over the next three years as an incurred expense, with Mr Wilkins explaining that AMP will embark on a number of unspecified “recovery options” to offset the remediation costs in the medium term.
AMP is facing criminal charges at the royal commission for potential contraventions of the ASIC Act and Corporations Act, accused of providing false and misleading testimony to the corporate regulator and harbouring a culture that prioritised in-house product revenue over the best interests of customers.
PI Cover will be driven up for every adviser in the industry. Thanks AMP. Just how is AMP helping Advice in Australia. I just hope AMP is banned from providing advice (selling products acceptable) and even AMP advisers, with their 10,000 clients forced to be very separate entities. Really, the sooner they’re all gone (advisers included) the better. Best to start from scratch I reckon.
AMP – We will be looking back 10 years!
Corporations Act 2001 – Financial records for companies must be kept for a minimum of 7 years.
Im sure any documents they could shift blame to advisers would be available… Any documents where there is a possible liabilities themselves, long gone.
Better yet just do a Financial Wisdom and lose all the documents….
Couple of quality FPA members there.
Cant give you a decent website to view accurate client details, but can now look back 10 years to find you’ve overlooked something so they can take it back and throw you under the bus… That would be right!
Agree, AMP will be trying to dig up any dirt they can on the advisers they’d like to sacrifice.
I imagine many AMP, Charter, Hillross advisers have begun a pre-2011 cull to save their skin.
So they’ve scr*wed their customers to the tune of $290 Million
and now they’re going to scr*w their suppliers (PI Insurer)
And scr*w the industry as a whole, as our PI Insurance gets hit
What is the likelihood they will scr*w their advisers (hello BOLR), and their policyholders (AMP Insurance) too – above average, no?
Why would anyone touch AMP?? This is going to reverberate for years to come.
AMP’s legacy management is the problem. Advice is being separated from product, and the market has left them behind.
AMP should be out of business. Watch this space, to get out of BOLR etc… what games they will play. Thank God I am not with them, sorry AMP Planners but you are on a sinking ship.
This will be fun. A “look back” of 10 years – are you serious? Are you deliberately offering your adviser force as sacrificial lambs? Have you made a provision for mass adviser exodus also? Would one of your “recovery options” be a reduction in the BOLR payout to firms you decide to dump, or choose to leave?