In her opening address to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry on Monday, counsel assisting Rowena Orr castigated AMP for providing a key piece of evidence at 9.30pm on the night before the second hearings were due to commence.
In the final minutes of yesterday’s proceedings, her colleague counsel assisting Michael Hodge QC clarified that an email copy of the required spreadsheet was actually sent after 5pm on Wednesday 11 April and a further copy after 9.30pm on Sunday night.
But notwithstanding the to and fro over the evidence deadline, Mr Hodge said now that his team has had an opportunity to assess the document, it contains significant information about “the proportion of in-house products on the approved product lists of AMP’s licensees”.
“It contains information about four of AMPs licensees: AMP Financial Planning, Charter, Hillross and ipac,” Mr Hodge said.
“We won’t summarise the position for all four licensees, however, in relation to the largest licensee, AMP Financial Planning, it shows that in each year since 2013, between 35 and 40 per cent of the investment options on the approved product list were in-house products, more than 90 per cent of the new customers invested funds in or paid insurance premiums in respect of one or more of AMPs in-house products, and the proportion of funds invested in or insurance premiums paid in respect of AMPs in-house products as opposed to external products by new customers was more than 70 per cent,” Mr Hodge revealed in an indication of further cross-examination to come on the topic of approved product lists.
The findings follow an ASIC report that lifted the lid on in-house product recommendation across the major financial institutions which Ms Orr also referenced in her opening address.
In his final address he also clarified that a statement from AMP director of advice and research Bradley Green has identified 13 incidents of AMP authorised representatives accepted “prohibited conflicted remuneration” in the post-FOFA period.
Two of five examples of these 13 incidents were not disclosed to the royal commission, Mr Hodge said.
The revelation followed an intense full-day cross-examination of AMP executive Jack Regan, in which he admitted he had a “level of discomfort” with the amount of AMP involvement in a so-called independent report conducted by commercial law firm Clayton Utz.
The royal commission financial advice hearings continue on Wednesday. Follow live at https://www.ifa.com.au/strategy/25404-royal-commission-financial-advice-hearings-live-blog
Completely missing the point yet again! So what if advisers branded as AMP recommend AMP products? It’s what consumers would expect. If consumers want independent advice they go to an independent adviser. If consumers like the AMP brand, they actively choose it and don’t mind paying a premium.
The question the RC should really be asking is whether Charter, Hillross and ipac are deceptively branded to appear as if they are independent, while actually recommending lots of AMP product that the client wasn’t expecting. The RC needs to stop being guided by ASIC who are hopelessly disconnected from reality, and just use their own common sense. Licensee branding is a much more important issue than APLs.
If we are going to shame companies and institutions for providing in house products, then where does that leave us when we look at by now very large organisations and funds that come under Industry Funds and State Government Superannuation funds? Are their clients not entitled to the same measure of justice that is meted out to the likes of AMP? Why is it that a large slice of Australian customers are left out of the mix?
RB
This triggers a more important test. For more than 30 years we have known about the ‘flexible morality’ and dubious business practices of major life offices: e.g. the whole of life policies in the 1960s and 1970s; so this is not a surprise, even though it is disappointing.
The true test is what does ASIC do when it knows that AMP has made a fool of ASIC by lying to it on at least 20 occasions. Yes, Mr ASIC Commissioner, those lies are offences. If this was a small to medium licensee it would be in all sorts of problems with senior execs facing charges laid by ASIC and the licence in jeopardy unless the licensee causes certain managers to ‘depart’. Let’s see how brave ASIC is when dealing with AMP. Hopefully better than its prior dealing with some of the big 4 banks.
I suspect this exercise will prove what that vocal minority have been saying for years is correct i.e. that there is one law for the big 5 and another law for the rest.
its a bit like going to the ford dealership and expecting to buy a bloody honda – its not happening – a bit like going to a Union and expecting to be treated honestly and without corruption – again its not happening.
Oh – thanks for clearing up the misunderstanding. So what you are saying is that AMP financial planners are meant to be ‘product floggers’, flogging the AMP product rather than acting in a client’s best interests.
Not a fan of AMP, but the devil’s advocate in me wonders why didn’t they just do as the unions did when they faced their royal commission, and the day before run ‘a previously scheduled archive destruction’ that they happened to forget to stop – all by accident of course. Those same unions escaped any punishment for that blatant disregard for provision of evidence, and as there was no evidence, the whole case of corruption and misuse of members funds simply disappeared in that situation.
Funny how one end of town can get away with blatant acts, and yet the other end is hauled over coals. Also wonder if AMP wasn’t a public company and forced into many layers of transparency, whether their attitude to the RC would also be different?
Your Super is with AMP. You pay them pretty heavy fees. They then invest your Super into their own products (equities, fixed interest etc.) of which the “internal fee” they charge themselves is a tiny tiny fraction. In essence they make a big spread from you. To some extent, you can say it’s business, however when the performance of the internal products are consistently bottom quartile, how can management/trustees say with a straight face that they have your Super in their best interest? I am surprised no law firm has launched a class action against the company for such deceptive, sub-standard behaviour.
that is exactly the same malfeasance that is happening with the industry funds – remember we are managing perceptions here not actually cases of the investment was bad. who is to say on a risk adjusted return that the AMP offerings aren’t market representative.. You guy so caught up in the lawyers picnic –
Correct Yachticus
We have heard the in house vertical integration argument ad nauseum.
What we have not heard is the research on whether the in house investment solutions achieved their objectives or not. The relevance being that if the in house investment solution worked why the hysteria that this was recommended to the client ? If the argument is that their is a conflict of interest how will that ever be removed given that the investment advice and strategy are linked ? How would the clients have been better off if the adviser recommended another fund rather than AMP? It is naïve to expect that every client will be offered a different investment product. How on earth can an advice business keep on track and service clients in a range of products and how is that beneficial to the client ?
Spot on John Edwards. Years form now when the finance industry is beaten down to a dying glorified social benefits platform, we’ll look back and remember all the innocent women we burned in the other dark ages.
Thats actually less than I expected… Now hit them up on how they offer a completely new upfront commission for advisers to churn clients from old, superior AMP insurance policies to new policies.