AMP, CBA Grilled Over Fees For No Service
Australia's largest wealth manager AMP has apologised for charging clients fees for financial advice they did not receive.
AMP and Australia's largest bank Commonwealth Bank are facing a grilling by the financial services royal commission over the fees for no service issue, which has also involved ANZ, Westpac and National Australia Bank.
AMP's group executive for advice Jack Regan has apologised to customers while admitting the company made untrue and misleading statements to the regulator about the problem.
The inquiry heard AMP 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.
Mr Regan, who found problems of governance and oversight when he became head of AMP's advice businesses in January 2017, apologised for the issues.
"On behalf of AMP I apologise unreservedly for the failings in respect of advice and service delivery to our customers and for the regulatory breaches," he said in a statement to the inquiry.
But Mr Hodge questioned if AMP in fact accepted it had made regulatory breaches, given its submissions to the commission only referred to possible misconduct.
The Commonwealth Bank will also be grilled about its fee for no service issues involving its subsidiaries Commonwealth Financial Planning and Count Financial Planning.
Senior counsel assisting the commission Rowena Orr QC said often clients received no service or did not receive the service they were entitled to, yet ongoing fees continued to be deducted from their investments.
Commonwealth Financial Planning and another CBA subsidiary BW Financial Advice are paying $88.6 million in compensation to 31,500 customers who did not receive an annual review as part of their financial advice service package.
CBA CEO Matt Comyn apologised to customers on Friday, saying it was unacceptable.