'We let you down'- AMP chairman apologises at annual meeting
AMP executive chairman Mike Wilkins has issued yet another apology to shareholders - the fourth in recent days - in the wake of the wealth's giant's plunge into crisis.
Addressing AMP’s shareholder meeting at the Grand Hyatt’s Savoy Ballroom on Thursday Mr Wilkins pledged the company would change its approach and rebuild trust after it emerged the company had lied to the regulator and doctored a report it claimed was independent into its charging nearly 16,000 customers fees for services they did not receive.
Senior counsel assisting the Hayne royal commission, Rowena Orr, QC, has made recommendations that AMP should face criminal charges for misleading the regulator over its conduct. AMP has strenuously denied that its misconduct rose to the level of criminal offence.
The scandal has led to mass board and executive resignations at AMP, including chairman Catherine Brenner, chief executive Craig Meller, general counsel Brian Salter and long-running director Patty Akopiantz.
Mr Wilkins defended the company's decision not to disclose its issues in public meaning they were explosively revealed at the royal commission.
“I’ve been repeatedly asked why we didn’t go public with the issues in our advice business and disclose immediately,” Mr Wilkins said.
“I have explained that as the issues were part of an extensive, ongoing ASIC investigation. Disclosing any facts or information, had the potential to prejudice the investigation and its outcome. Moreover, the usual practice is to disclose, in conjunction with the regulator, once the reviews are complete.”
We are truly sorry. We let you down. We have our customers down
Mike Wilkins
"We are truly sorry. We let you down. We have our customers down. And we have let the wider community down. We understand you want change."
Mr Wilkins said the inappropriate behaviour of a "small" number of people in AMP's wealth business was compounded by misrepresentations to ASIC.
"Let me be clear. From my perspective, the number of misrepresentations is not what matters," he said.
"In my view, one misleading statement is one too many."
Ahead of the meeting, AMP reported a net cash outflow of $200 million from its Australian wealth management arm for the first quarter of 2018, which was in line with the first quarter of 2017.
The subdued performance in AMP's wealth management arm came as AMP Capital's net external cashflows for the quarter hit $1.6 billion, driven by strong cashflows in real assets.
AMP Bank also improved during the quarter, growing its loan book by 2 per cent to $19.8 billion during the quarter.
AMP also flagged higher costs from its response to the regulatory investigations into the company, saying it would update the market before or at its first half results in August.
Mr Wilkins said AMP had been working closely with corporate clients to reassure them.
He said the withdrawal requests had “eased back in recent days”.
Embattled wealth manager AMP is expecting to make further allowances for remediation of customers and other expenses in the wake of ongoing investigations by the corporate regulator into the financial advice sector.
AMP also said it would defend two class actions - potentially claiming as much as $2 billion on behalf of investors - that have been filed against it. The wealth manager also indicated it would get its house in order before pursuing further steps in its strategic review, which could involve the sale of parts of its life insurance and New Zealand business.
In releasing its first-quarter trading update ahead of its annual shareholder meeting on Thursday morning, AMP said it was continuing to review the conduct of financial advisers, the quality of their advice and how it charged customers fees, and would update the market on its findings at or before its first-half financial results in August.
The flagged rise in expenses comes as changes to the superannuation concessional cap in 2017 again kept a lid on growth in AMP's wealth management arm during the first quarter of 2018.
AMP said it recorded a net cash outflow of $200 million from its Australian wealth management arm, which was in line with the first quarter of 2017.
The subdued performance in AMP's wealth management arm came as AMP Capital's net external cashflows for the quarter hit $1.6 billion, driven by strong cashflows in real assets.
AMP Bank also improved during the quarter, growing its loan book by 2 per cent to $19.8 billion during the quarter.
Market watchers are tipping AMP could face one of the largest-ever votes against its remuneration report at the annual meeting.
Mr Wilkins told shareholders ahead of the vote that the company expected to receive a "strike" vote against the report which means a "no" vote of at least 25 per cent.
'Very disappointed'
Mr Wilkins said the company "stands behind" its advice business.
"However, we have been very disappointed that, in some instances, our customers have not received appropriate levels of service for the fees they have paid. We are working hard to accelerate the remediation for our customers," he said in the company' trading update to the ASX.
“We continue to progress the portfolio review, however we are currently prioritising the performance of the business, board renewal and the appointment of a new chief executive.”
Mr Wilkins said the past month had been exceptionally difficult for AMP's customers, shareholders, employees and advisers.
“We recognise there is a lot to be done to restore the public’s confidence in the company,
which is a priority for the board," he said.
In the statement released along with the quarterly results, Mr Wilkins said AMP was well-capitalised and areas of its business were delivering strong growth.
“AMP Capital saw strong external fund net flows particularly in real assets and AMP Bank continued its loan growth, despite a tighter market. Australian wealth management experienced cashflows in line with the first quarter of 2017, as well as a small reduction in assets under management following weaker investment markets," he said.
Total Australian wealth management assets under management at the end of first quarter 2018 came in at $128.3 billion, down 2 per cent from the fourth quarter of 2017 as a result of negative investment markets during the quarter, the company said.