A 97 per cent profit drop caps off disaster year for AMP

Written on the 14 February 2019 by Business News Australia

A 97 per cent profit drop caps off disaster year for AMP

Of all the companies hit hard by the findings of the banking and finance Royal Commission AMP was one of the worst hurt.

However, amidst the chaos of renumerating customers for fees charged without rendering services, the company has still turned a profit.

The comparably meagre $28 million profit is far shy of the $848 million the company recorded at the end of FY17.

The revelation that AMP was charging customers fees without providing services set off a chain of events that were difficult to reel in for the financial services provider.

First, the company lost its CEO Craig Meller who stepped down soon after the royal commission revelations were brought to light and its chairman Catherine Brenner.

And then came a swathe of class action law suits from Quinn Emanuel Urqhart & Sullivan, Phi Finney McDonald, Slater and Gordon, Maurice Blackburn, and Shine Lawyers.

Adding salt to the wound was the announcement in June 2018 that the company had fallen off the ASX top 20 index, replaced by global packaging company Amcor Limited.

Soon after, in a move unrelated to the royal commission, the Australian Securities and Investment Commission (ASIC) took AMP to the Federal Court claiming that AMP financial planners were engaged in 'rewriting' conduct for insurance advice.

AMP chief executive Francesco De Ferrari says these experiences have been important lessons for the company to learn.

"2018 has been a challenging year for AMP," says De Ferrari.

"The Royal Commission has been a confronting by 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."

The impact of the royal commission saw the group's net cash outflows hit highs of $3,968 million as the group attempted to rebuild its reputation.

Shares in AMP are down 3.28 per cent to $2.36 per share at 11.13am AEDT.

More here

Reported by Business News Australia

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