“Stinking AMP rots from the head down. Just like a fish”

The fish rots from the head and AMP is stinking. As the royal commission into banking spent the day unpicking the conduct of AMP, some outrageous behaviour was exposed.

By Adele Fergusson

It doesn’t get much worse – or serious – than blatantly lying to the corporate regulator on at least 20 occasions, but AMP did just that.

The commission’s investigations have also caught the board and senior executives meddling with and changing an independent expert’s report before it was finalised and passed off as an “independent” investigation to the Australian Securities and Investments Commission.

“By my count that takes us to the 15th false or misleading statement by AMP to ASIC, I take it you’ve lost count by now,” Senior Counsel Assisting Michael Hodge QC joked with Anthony Reagan, appearing for AMP.

It goes to the heart of what has gone wrong in some of the country’s biggest financial institutions: poor culture, greed, a lack of respect for the law and ASIC and a breach of trust.

The evidence coming out of the royal commission is so cynical and grubby that the social licence to operate must be questioned.

 Jeff Morris, the Commonwealth Bank whistleblower who blew the lid on misconduct at the bank’s financial planning division, has been watching the royal commission and is struck by the deep seated corruption that seems engrained in the sector.

He is also frustrated that so many people involved in the corrupt behaviour won’t be called.

Jeff Morris' blew the whistle on misconduct at Commonwealth Bank.

Jeff Morris’ blew the whistle on misconduct at Commonwealth Bank.

Photo: Brendan Esposito

“This army of corrupt managers who oversaw this harvesting of thousands of innocent people and pocketed bonuses have been allowed to ride off into the sunset and work elsewhere in the industry,” he said.

“They deserve to be exposed like the paedophile priests.”

He has a point. Some perpertrators have left financial institutions and landed new senior positions without ever being punished. It means some of the people giving evidence now at the royal commission aren’t properly equipped to answer the questions being asked.

In AMP’s case it has been shown to have broken the law and blatantly lied to the regulator – over the issue of fees for no service. This is where customers were literally paying their hard-earned money for nothing, while the big four banks and AMP raked in hundreds of millions of dollars in fees.

AMP's Anthony 'Jack' Regan admitted the company had misled the regulator.

AMP’s Anthony ‘Jack’ Regan admitted the company had misled the regulator.

This wrongdoing isn’t about one or two bad apples – a term repeatedly used over the years by these institutions to discredit stories about the scandal ridden sector – it is about bad culture and a breach of trust.

The royal commission has been given a short time frame to investigate the sector which means it won’t be able to cover many topics or many organisations, which is a missed opportunity.

But the slice it has focused on is damning. AMP blamed charging fees to customers that it provided no service on an administrative error, but it wasn’t. It was a deliberate decision made by AMP management to profit from its customers then lie to cover it up.

Given these revelations it will be interesting to see how culpable the other institutions were in terms of misleading or lying to the regulator.

In CBA’s case it says it fessed up to ASIC in July 2014 over fees for no service but it had known about it for at least two years before reporting it as a problem. ANZ became aware of the problem in 2008 but the conduct continued until 2013 when it reported the breach to ASIC. Administrative errors or deliberate misconduct? We will find out soon enough.

But for now the spotlight is on AMP. The executive hauled in to give evidence Jack Regan, has been with AMP since 2002 and became head of financial advice in January 2017.

His attitude to some of the shock findings was glib at best. Regan treated a series of emails showing a conscious decision to protect the profitability of AMP with the following response: “I think they [emails] show a culture that is not as robust as it should be.”

Such a response to the company he works for and the division he runs, requires a more heart-felt response than this.

Some of the revelations were disgraceful. For instance, in 2015 AMP told ASIC an audit by PwC of financial advice had found that “no systemic issues were identified” when this was not the case.

AMP chairman Catherine Brenner is accused of meddling with an independent investigation.

AMP chairman Catherine Brenner is accused of meddling with an independent investigation.

Photo: Christopher Pearce

The royal commission drilled into the integrity of independent expert reports. AMP hired Clayton Utz to conduct an independent investigation but internal emails and draft reports reveal it was anything but independent. Regular correspondence between AMP and Clayton Utz smacked of undue influence. It showed the board, including the chair Catherine Brenner, made changes, which is unacceptable and needs to be properly explained.

It raises the issue of the corporate regulator, ASIC, which has been repeatedly lied to and misled. What will ASIC do about it?

It is tempting to conclude that this lack of respect for the regulator is due to it being seen as soft on the big end of town and too trusting. When the big end of town are caught doing the wrong thing they more often than not enter an arrangement known as an enforceable undertaking, it is effectively a slap on the wrist.

It is tempting to conclude that this lack of respect for the regulator is due to it being seen as soft on the big end of town.

For years ASIC submitted draft press releases for vetting to the very organisations it was supposed to be policing. This only stopped in 2015 when it was outed by Fairfax Media as part of a media investigation into the National Australia Bank financial planning scandal.

It should be a wake up call to ASIC that it needs to get tougher. It isn’t just about more powers, it is having the will to use them. It should also be a wake up call to the government to extend the royal commission.

Originally published in The Sydney Morning Herald Wednesday 18 April 2018.  


Editors note (19-4-2018):  Mike Carlton just tweeted this link from 7 August 2016 about what Scott Morrison had to say about Shortens banking royal commission suggestion back then:




4 thoughts on ““Stinking AMP rots from the head down. Just like a fish”

  1. For a long time AMP used Financial Planners and they would sell AMP investment products.
    These financial planners were spread across Australia, with at least one in Coffs Harbour.
    I am sure that there were many people lured by the projection of wonderful returns, but of course it was too good to be true.
    Meanwhile the commissions these guys reaped, allowed them fancy lifestyles and spending power.
    When the GFC hit, most of them went out of business, but the investors were left with little more than their capitol. Sometimes a lot less when the fees were deducted.
    The ASIC has dropped the ball as far as we can see on the banks, so I guess that they are no different when it comes to AMP.
    These directors and managers will get a slap on the wrist, but still walk away with millions in pay offs and bonuses.
    Shameful really, but that is capitalism for you I suppose.

  2. No Archie, that’s not capitalism at all.

    What you’re commenting on is the classic failure of socialist regulation and interference in the marketplace. This ALWAYS leaves those investing their capital worse off than the ones “picked as winners” by government.

  3. Yet the current federal government told us we didn’t need this Royal Commission. Everything was fine and self regulation would ensure everything remained fine they said. Well ‘rhubarb’ to that.
    Only two weeks of hearings so far and we have heard a litany of guilty pleas from the Big 4 Banks and AMP so far to institutionalised fraud, theft and corruption to name just a few of the crimes uncovered.
    I suspect you are right Archie; “the directors and managers will get a slap on the wrist, but will still walk away with millions in pay offs and bonuses” when they should be ‘breaking rocks in the hot sun for the next 20 years’ as part of a jail sentence in my opinion. It’s one law for the rich and another for everyone else apparently. Unless public opinion becomes an uproar of course.
    As was highlighted on 7.30 Report last night these Corporations just sneer at ASIC as being “worse than useless”.

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