In its submission to the royal commission’s fifth round, which covered superannuation, AMP said it supports the need for strong and well-resourced regulators with oversight of the financial services sector.
“Additional resourcing may go some way to enable ASIC to act more promptly, but care needs to be taken, given that ASIC is industry funded, to ensure that due process and due accountability is embedded in any new regulatory structures or procedures,” the group said.
However, AMP does not support the establishment of a new regulator for superannuation, believing this may lead to “more uncertainty and confusion”.
The company believes that a number of changes could be considered that would assist the government, the regulators and financial services entities in fulfilling their responsibilities, including “the establishment of a mechanism for the government to hold the regulators accountable for their overall performance”.
The troubled financial services group noted that the Financial System Inquiry proposed the establishment of the Financial Regulator Assessment Board (FRAB) to assess the performance of the regulators against their mandates.
“This reform was not adopted but should now be reconsidered,” AMP’s submission states.
“The FRAB could provide advice to government, based on the FRAB’s assessment of the regulators performance, on how best to nuance or rebalance the regulators’ portfolio responsibilities.”
AMP also argued that there is a need for greater clarity in regulatory guidance and the definition of terms.
“This would assist the industry with more consistent interpretation of the terminology,” it said.
“A good example would be a definition of ‘community expectations’.”
Finally, AMP argues that there is “an inherent conflict of interest” in relation to ASIC receiving the fines directly or indirectly that they impose on the financial services sector.
“Consideration should also be given to the approach adopted by the Financial Conduct Authority (FCA) in the UK towards penalties and fines, which adopts a proportionality approach which ensures that fines reflect the extent of the damage and act as a deterrent,” it said.
AMP’s response to the fifth round of the royal commission comes after the inquiry heard how the group knew it was charging life insurance premiums to dead customers as far back as 2016 yet failed to alert regulators.
The company is also facing a class action led by Quinn Emanuel Urquhart & Sullivan, which argues the company “should have disclosed to the market information about the issues highlighted during AMP’s appearance at the royal commission hearings in April 2018”.
AMP said it will vigorously defend this and all similar proceedings.
Hi AMP. The community expectation is that you obey the law and do not lie or hide information from regulators. Difficult to fathom isn’t is.
The biggest problem with the financial planning industry, and it’s unfortunate, is “financial advice” is problematic. You have stupid clients. You have greedy clients. You have time poor clients. You have disorganised clients. Generally a combination of some, or all. This combination probably makes up 75% of all possible clients. ASIC will apportion most of the risk of dealing with these types of clients to advisers, rather than clients who have these defects of character. And idiotic, greedy, rapacious advisers will always be around, … forget ever getting rid of them. legislating them out of business is a ruse. Rapacious lawyers are still around, despite their ‘higher’ standing in the eyes of consumers and regulators. The point is, the language of money, and emotions around money, make this industry really complex. Selling new cars, or upmarket shoes isn’t as complex, or regulated. We keep going around in circles forgetting that.
deep insight. thank you. I totally agree with you.
I for one, make it very difficult for a new client to come on board, only take them by referrals. as I know the above is true, in fact, i’d say 90% are a liability to avoid.
what are possible solutions?
Community, or in reality “commissioner” expectations are that all advisers, wealth managers, banks etc do not charge customers and provide services all for free. Community expectation is nothing more than something that has been pulled out by the Royal Commissioner as a mechanism to force the hand of the financial services industry in lieu of legislation being in place to mandate change. Illegal behaviour is not acceptable by any means, however businesses are in business to legally make a profit, which is how non-communist countries work. Sadly Australia is starting to show signs of becoming a communist country and Commissioner Hayne’s interim report where he cites that he is giving consideration to limiting financial planning practice client numbers and fees is a classic example of this!
You are right. You also have Shipton putting Gov’t staff into Private business to monitor them! What’s next? a firing squad for not giving out a FSG?
Hit the nail right on the head!
Definitely AMP and other groups like the banks needed a boot up the proverbial, but the royal circus was a predetermined politicised exercise with a specific agenda agreed with the now proven to be corrupt ASIC, against the FP profession to reduce the profitability and increase the risks for practitioners and institutions alike, with the aim of unionising all superannuation wealth in the country. Moronic logic like that displayed by Hedware will try to state that ISA have better performance and lower fees, both of which are false when measured correctly in like with like comparisons. When will ASIC attempt to redeem themselves and prove that they are not the rotten to the core sly corrupt biased cop, and conduct proper thorough investigations into ISA, a sector that represents trillions in retirement wealth?
nothing confusing, they just want you to provide a service to the community but make no money….oh wait for that’s socialism or is it communism? either way the public need to wake the fk up, its a business not a public service
Could you define ‘community expectations’ James, and who are ‘the community’ that holds these expectations?
Anyone surprised that AMP are confused about “community expectations” ?
Look at the behaviour of their management since they demutualised.
They are wanting them to state what it includes so the government can’t pick and choose when they want to apply “community expectations” when they feel they want if it applies to one it applies to everyone get old grandfathered commissions vs Industry super fund charging all their members for intra fund advice one would say they are the same thing just with different names… but I guess its a closed case of “community expectations”
Spot on – we can’t legislate or enforce ‘feelings’ which is what community expectations are. These are purported to represent all Australian’s feelings, however in reality they are the feelings of the progressive and far leaning liberal left consumer and law ‘groups, lobbyists, societies’ who are pushing their rotten Marxist agenda onto an unwitting and docile public.