AMP Chairman resigns following Royal Commission fallout
Written on the 30 April 2018 by David Simmons
In the wake of serious misconduct by AMP (ASX: AMP) revealed last week during the Financial Services Royal Commission, chairman Catherine Brenner has today resigned from the board.
Brenner's resignation follows CEO of AMP Craig Meller's resignation on 20 April.
Both Brenner and Meller's departures follow the Royal Commission's discovery that AMP was charging its customers fees without providing any services in return.
In a statement to the ASX, the AMP board deflected most of the blame for the company's actions surrounding this issue.
"Having considered and assessed the matters, the Board is satisfied that the former Chairman Catherine Brenner, former Chief Executive Officer Craig Meller and the other directors did not act inappropriately in relation to the preparation of the Clayton Utz report," says AMP.
"The Board, including the former Chairman, were unaware of and disappointed about the number of drafts and the extent of the Group General Counsel's interaction with Clayton Utz during the preparation of the report. The Board commissioned and received the report. It was not a matter for the Board's approval."
As a penalty to management, the company has announced it will reduce the board's fees by 25 per cent for the rest of 2018.
As for the AMP staff who were directly involved in the misconduct, the company says it is conducting an external employment review to determine if the individuals will keep their jobs or have their remuneration slashed.
Brenner says she is disappointed and accepts responsibility for the issues raised at the Royal Commission.
"I am deeply disappointed by the issues at hand and am particularly concerned for the impact they have had on our customers, employees, advisers and shareholders," says Brenner.
"As Chairman, I am accountable for governance. I have always sought to act in the best interests of the company and have been in discussions with the Board about the most appropriate course of action, including my resignation. The Board has now accepted my resignation as Chairman as a step towards restoring the trust and confidence in AMP."
Brenner will be replaced by Mike Wilkins as executive chairman for an interim period while the process for selecting a new chairman is conducted.
AMP also announced that group general counsel and company secretary Brian Salter will leave the company. The board has decided to forfeit his outstanding deferred remuneration.
The wealth management company now faces possible criminal charges after the royal commission heard it deliberately and unlawfully continued charging fees to "orphan" clients for three months, despite them not receiving actual advice.
AMP together with the nation's big four banks have collectively paid nearly $219 million in compensation to more than 310,000 financial advice customers charged fees for no service in return.
AMP has personally refunded $4.7 million across more than 15,700 customers since it began cooperating with ASIC in May last year.
The company is also facing a potential class action lawsuit from Quinn Emanuel Urqhart & Sullivan (QE) on behalf of aggrieved shareholders.
QE announced that it will investigate a class action against the financial services giant which has admitted to lying to its customers and regulators, shaving $1 billion off its shareholder value in the process.
Shares in AMP closed at $4.02 per share on 27 April 2018.
Business News Australia
Author: David Simmons