AMP misled the Australian Securities and Investments Commission (ASIC) at least 10 times over seven years, charging tens of thousands of customers fees for services that were not delivered.
AMP’s financial advice division chief Jack Regan, who assumed the role in January last year, told the financial services royal commission on Monday that it was “basic ethics and morality” not to charge people for something AMP knew it was not going to provide.
Yet that was what AMP did to almost 29,000 customers after financial advisers sold their client lists to AMP. Affected customers have either been paid or promised compensation, but AMP and ASIC are still investigating.
The royal commission is wading through long lists of admitted cases of misconduct by the Big Four banks and was told yesterday that AMP ignored legal advice that charging its customers for services they did not receive was unlawful.
AMP has admitted making 10 false statements to ASIC and admitted it provided incentives for external planners within its network to sell customers AMP products.
Mr Regan, who faced a torrid time at the inquiry on Monday, said an AMP review of its processes found that staff had approved the ongoing charging of fees against legal advice.
ASIC Chairman Peter Kell said on Monday that many businesses had prioritised revenue over advice.
“I think it’s clear from our experience that the firms in question prioritised fee revenue from their advice businesses over the provision of services to clients,” Mr Kell said.
“We found in all the instances that the systems that underpinned the ability to collect revenue were better developed than the systems that ensured the client received the advice service.”
On a separate front, two key financial advice bodies are at war on qualifications.
Over the next two weeks, Commissioner Kenneth Hayne will hear about financial advice complaints involving Westpac, CommBank, ANZ, NAB and AMP. At the same time, the Financial Planning Association (FPA) is fighting moves by its standards body to revise basic education requirements, describing them as a backward step.
Senior counsel Rowena Orr QC said there had been a big increase in the financial advice sector in recent years.
The number of financial advisers had jumped from about 18,000 in November 2009 to more than 25,000 – a 41 per cent rise, she said. However, according to information given to ASIC, only about 35 per cent had a relevant university degree or higher qualification.
Revised minimum education requirements are set to come into force in January with new financial advisers requiring a relevant university degree. Existing advisers will be given time to complete a relevant degree if they haven’t already done so.
A new code of ethics will also come into force on 1 January, 2020.
A bid by the Financial Adviser Standards and Ethics Authority (FASEA) to revise education requirements has been slammed by the FPA.
FPA chair Neil Kendall said members were outraged that FASEA planned to recognise a law degree as a relevant financial planning qualification.
“The FPA and many others in the financial planning profession have spent 20 years building a culture of learning among planners. These announcements by FASEA and a refusal to acknowledge the study done in advanced diplomas and the Certified Financial Planner program will undermine that learning culture if it is not reviewed,” he said.
“A financial planner with a business degree, eight subjects in the advanced diploma, and five Masters level subjects in the CFP program is treated as unqualified in the latest FASEA proposal, but an existing planner with a law degree only has to complete a non-technical bridging course to meet the standard.”
The matter was the subject of an FPA questionnaire issued to its 13,700 members last week.
Do you use a financial planner? Were you satisfied with his or her qualifications?