AMP full-year profit plunges to $28m in wake of Hayne royal commission

 afr.com  02/13/2019 21:51:00 

In particular it flagged there has been an "increased level of employer review of corporate super arrangements" since AMP's appearance at the royal commission, but it said AMP has retained the majority of large customers following review.

The Hayne royal commission revealed AMP super trustees delegated their day to day operation to various parties within the AMP Group, which resulted in poor outcomes for members. In some cases, members got worse returns than if they had put money in an interest bearing account at AMP Bank. AMP super trustees are now facing potential action from the Australian Prudential Regulation Authority after Hayne refrred AMP to the prudential regulator.

AMP revealed in the 2018 financial year it spent $469 million on remediating customers for advice not provided, while another $32 million was spent on the external legal and consulting costs for appearing in the banking royal commission.

Transitional year

In January, AMP flagged its full-year profit had been hit by the need to hold extra capital for the life insurance division it will sell to Resolution Life.

AMP's full-year financial results. 

Following the Hayne banking royal commission which exposed a myriad of issues at the wealth giant including fees for no service, AMP overhauled its board and the management team.

AMP's executive team is now led by former Credit Suisse banker Francesco De Ferrari. Head of wealth Paul Sainsbury will leave the business.

Mr De Ferrari said the banking royal commission has been "a confronting but valuable experience for the financial services industry and has served as a catalyst for change at AMP".

"We have undertaken board and leadership renewal, accelerated client remediation and sharpened our focus on delivering better value to customers including reducing fees on our MySuper products," he said.

He said the sale of its life insurance division to Resolution Life "fundamentally resets AMP, reducing the capital intensity of our portfolio and creating a new, more streamlined and agile group".

He said 2019 will be a "transitional year as we prioritise the complex legal separation from the businesses sold to Resolution Life, and deliver on our commitments to remediate advice customers and strengthen our risk management, governance and controls."

AMP's Australian adviser numbers were down 5.7 per cent to 2704 in the 2018 financial year from 2867 the previous year.

AMP will pay a final dividend of 4¢ for calendar 2018 on March 28, franked to 90 per cent, down from 14.5¢ n 2017.

On Wednesday, AMP shares closed at $2.44, compared with a 52-week high of $5.47 in March 2018.

More to come.

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