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GPA CEO Mike Wilkins admitted that the troubled company could be the victim of another time bomb after launching an internal investigation into charges and services billed to super clients. company, announced Hayne's royal commission.
The interim CEO had just finished explaining that the issue of billing for no-cost services could cost up to $ 1.2 billion to the bank and that it would take nine years for the finish when he launched the bomb.
Assistant counsel Michael Hodge, QC, questioned Mr. Wilkins about a number of infractions identified by the company on October 17 and why they had caused an urgent sampling of client records dating back to A decade.
"In this regard, is the risk incurred by AMP related to another case of non-payment of service fees?"
"Yes," answered Mr. Wilkins.
Publicity
PwC has been engaged to determine whether administrators and licensees have "effective processes, controls and reporting for governance, outsourcing management, oversight and oversight of incremental costs and services at the workplace ".
Mr. Wilkins was discussing what AMP called his "basic approach" of paying customers back for the bad advice or advice they had paid but that they had not received in what is now known as of scandal "fees without service". According to the most recent estimates of MPAs, the remuneration paid on the market was $ 290 million after taxes.
"I think we have not fully understood the impact of that … I think that AMP felt, along with the industry, that it was not not such a big problem, "said Mr. Wilkins.
Attempts to reduce refunds
Some badysts have estimated the bill for fee-for-service services at $ 6 billion, but financial institutions have not yet funded more than $ 2 billion collectively.
The discovery of the problem and AMP's attempts to interfere with an independent report to the regulator led to the resignation of its president Catherine Brenner and chief executive Craig Meller.
AMP is in conflict with ASIC over attempts to resolve the debacle.
Among the problems faced by AMP is its desire to segment the customers concerned into a group in which the amount of the reimbursement is reduced because some services have been provided.
The royal commission misrepresented NAB for repeatedly attempting to argue for lowering its own compensation bill for the same problem over a three-year period.
AMP sought to exclude from the compensation program approximately 271,000 clients who paid $ 500 per year or less, but has since included them in the program.
Mr. Wilkins said that if AMP and the regulator could agree, his best estimate of customer reimbursement for the issue of unserviced billing and poor advice would be $ 778 million, including program costs. .
AMP employs 150 people working on customer compensation. If he does not reach an agreement, his best estimate is 1.185 billion dollars.
Senior executive dismissed
In another development, Mr. Wilkins, Acting CEO until Francesco de Ferrari takes office Monday, said an officer of one of his licensees had been fired for challenging a direct order to remove the fees for clients who were not receiving services.
On May 31, 2018, AMP informed ASIC that a general manager of one of his consulting activities continued to charge fees to customers who did not have a designated advisor and could not receive of advice although they have been instructed to stop this practice.
Mr. Hodge asked Mr. Wilkins whether the failure of the company to instruct his army of advisors to not charge clients for services they could not or did not want was a failure. Mr. Wilkins agreed.
"Our policies and procedures were not appropriate or adapted to the objectives at the time," he said.
"Apart from financial advisors, it is hard to think of a profession or a group of people who think that they are charging money for a service, is it ok to not provide the service? " Mr. Hodge asked.
"One would think that when a paid service was agreed, the service would be provided," replied Mr. Wilkins.
Mr. Wilkins said that four directors and executives had lost their bonuses on free service fees and that one had received a written warning. AMP retained Deloitte consultants to ensure that the company did not charge any additional fees to its customers.
"The leaders speak"
The work done by Deloitte will also clarify and strengthen the expectations of the management team within the MPA and should be finalized by December 2018. Mr. Wilkins stated that compliance systems were under-invested and that acceptable behaviors lacked precision. to the company.
"I think it's important that the leaders of the organization give the right tone.I think it's important that the leaders defend the debates as to what they do." in this respect, "he said.
At a meeting of the AMP Risk Committee in May 2018, a document containing information on "Risk 11" or the conduct of its advisers was presented.
He revealed that "mediocre, inappropriate or non-compliant advice" still poses a huge risk to society and "AMP has the highest rate of out-of-pocket advisers compared to current sector advisers (9% vs. 5%). ). "
It was also revealed that AMP was seeking to adapt the bank's senior managers' liability regime to a format that would be appropriate for the bank, with AMP Group's CEO thus escaping the new obligations arising from the model pursued by the GPA.
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