The fallout for financial services firm AMP Ltd (ASX & NZX: AMP) continued on Monday as Catherine Brenner resigned as chairwoman to be replaced immediately by Mike Wilkins.
Wilkins became executive chairman as the AMP board searches for a replacement for Craig Meller who left after the scandal of the firm charging for financial advice not given was revealed.
AMP also said group general counsel and company secretary Brian Salter would leave the company. His outstanding deferred remuneration would be forfeited as a result of the board exercising its discretion, the company said in a statement to the NZX and ASX.
AMP's share price has plummeted in the wake of the inquiry which heard the company made a deliberate decision to continue charging fees to a group of “orphan” clients for three months when they went into a central pool, despite them receiving no advice services and legal advice that it was unlawful.
The issue arose when AMP acted as a buyer of last resort, buying an adviser's client book if they were unable to sell it to another authorised AMP representative.
In some cases, system errors were to blame but the inquiry heard AMP did not tell ASIC about the deliberate decision to keep charging the fees. AMP has refunded $A4.7 million (NZ$5 M) in fees to date to 15,712 customers affected.
The company said it had completed a review and the fee for no services practices ended in November 2016. The board said it was satisfied Ms Brenner, Meller and the other directors did not act inappropriately in result of the Clayton Utz report on AMP's fee for no service.
“The board, including the former chairwoman, were unaware of and disappointed about the number of drafts and the extent of the group 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.”
The board announced the following actions:
- Recognising collective governance accountability for the issues raised in the Royal Commission and for their impact on the reputation of AMP.
- The board is reducing fees for all AMP Ltd board directors by 25% for the remainder of the calendar year.
- The employment and remuneration consequences for individuals within the business responsible for the fee and no service issue will be determined on finalisation of an ongoing external employment review, expected to be completed shortly.
Wilkins said AMP respected the Royal Commission process.
“I can assure you the evidence and submissions represented by Counsel Assisting are being treated extremely seriously by the board.”
*Dene Mackenzie is business editor of the Otago Daily Times.