The wealth manager’s group executive for advice and New Zealand, Anthony Regan, took to the stand on Monday to answer questions around fees the firm charged to thousands of customers even though they received no advice or service.
More than 300,000 customers from Australia’s big four banks and AMP are being collectively refunded A$216m (£118m, $168m, €136m) after they were charged for advice they never received.
As reported by International Adviser, ANZ Bank was recently fined for charging fees but providing no service to clients.
The commission entered its eleventh day on Monday and will, over the next two weeks, focus on companies that give financial advice.
No capacity
Regan was questioned about how AMP charged customers it had inherited from its financial planner network for three months even though it was not, and could not, provide them with advice, reports local news programme ABC News.
AMP acquired books of clients from advisers as a ‘buyer of last resort’, where an adviser wants to retire but cannot sell their book of business.
Regan admitted that it did so knowing it had no capacity to provide them with any service.
Misleading the regulator
Under questioning from Michael Hodge QC, the senior counsel assisting the commission, Regan also admitted that the company had repeatedly misled the Australian Securities and Investments Commission (Asic).
This involved covering up the deliberate nature of its 90-day fee policy, where clients were charged for that period even though they were not getting any advice.
The exchange between Hodge and Regan was described by local newspaper Sydney Morning Herald as “excruciating”.
“The processes didn’t fail did they Mr Regan,” Hodge asked. “There was a deliberate decision made by AMP to retain fees on some of these clients.”
Regan responded: “As I recall, I think it’s both.”
Hodge countered: “In some cases there was a failure of process, but in other cases it was a deliberate decision by AMP?”
“That’s correct,” Regan said.
“And AMP didn’t tell Asic that they had made this deliberate decision?” Hodge questioned.
“That’s correct,” Regan said.
