AMP used to be one of the most respected financial institutions in Australia, but now it’s in the headlines for all the wrong reasons.
Yesterday, ASIC filed charges against AMP for allegedly charging dead customers, despite having been informed of their passing.
While shocking, it is not even the first time AMP has been accused of such events after stories of the same thing came out during the Royal Commission into financial services.
And now, AMP is reportedly looking to axe 20 per cent of its staff in a move to streamline the business.
An AMP spokesperson told Yahoo Finance the changes come as the business is looking to update its organisational structure.
“Scott Hartley was appointed AMP Australia CEO in January, and has been working through changes to ensure the business is sustainably competitive, and focused squarely on delivering for customers and members, and supporting our strong relationships with our adviser and broker partners,” the spokesperson said.
“The first step was providing an updated organisational structure for AMP Australia and the announcement of Scott’s leadership team, earlier this month.”
The spokesperson said the company is not working through the details of each AMP Australia business, including team structures in the levels below the leadership team.
“This will unfortunately involve impacts to some peoples’ roles,” the spokesperson said.
Founder and CEO of Deep Data Analytics, Mathan Somasundaram said the AMP “reboot” will not cut it.
“The marketing spin is ‘shrinking to greatness’. Brand AMP is going through death by a thousand cuts,” he said.
“It is starting to look like management has given up defending the mistakes of the past. I am sure they will do a deal with regulators like in the past.”
Somasundaram said the job cuts are more likely about reducing the cost base for a potential new acquirer, and less about improving the business.
“It’s a bit like NBN ahead of the float. AMP’s shareprice has fallen over 90 per cent in 20 years. The market view of AMP’s management track record is not something to write home about,” Somasundaram said.
In 2001 the AMP share price was sitting at $13.53 per share, today that has fallen to $1.16 per share.
So where did it all go wrong for AMP?
Charging dead customers
During the Royal Commission in 2018 it was revealed AMP had been charging insurance premiums to deceased customers.
The Royal Commission was told that AMP staff knew the company was charging thousands of dead customers life insurance premiums since at least 2015.
At the time Commissioner Kenneth Hayne asked the institution: "Charging premiums for life insurance to someone that is dead? That's the position, isn't it?"
AMP actually defended their position at the time, claiming it was "inevitable and appropriate" and placed the blame on the life insurance providers.
Following the Royal Commission AMP said it had put in place a new policy where premiums would stop being charged after being informally notified of the customer's death.
However, yesterday ASIC filed charges in the Federal Court claiming that the practice was still continuing at AMP.
ASIC alleges AMP was involved in charging life insurance premiums and advice fees to more than 2,000 customers despite being notified of their death between 2015 and 2019.
AMP acknowledged the fresh charges in a statement yesterday, saying it had taken steps towards solving the issues.
AMP Group General Counsel David Cullen said: “AMP has taken this matter very seriously and we will now carefully consider the allegations raised by ASIC. We have been assisting ASIC with its investigation and will continue to engage constructively as part of the legal process.
“When we discovered the issues, we immediately moved to change our processes and systems and took action to ensure the beneficiaries of customers impacted were fully remediated. AMP apologises to all customers and beneficiaries who were impacted by this matter.”
AMP has so far remediated 10,155 customer accounts to the sum of $5.3 million from 2011 to 2019, which includes compensation for lost earnings. The remediation was completed in May 2020.
In the last 12 months AMP has faced scandal after scandal, from poor management to sexual harassment claims. As a result of the fall-out, the leaders of each arm of the business have resigned.
AMP Limited chief Francesco de Ferrari announced his resignation in April after swirling rumours and the collapse of merger plans with Ares Management.
Boe Pahari is set to leave the business all together after having to step down from his role of CEO of AMP Capital after sexual harassment claims surfaced, something that triggered three senior executives to leave in the span of one day.
And former CEO of AMP Australia Alex Wade’s sudden departure was reportedly triggered by a series of complaints over explicit photos.
InvestSMART deputy head of research Gaurav Sodhi told Yahoo Finance last month that the culture at AMP is a direct result of the board and senior management, as it was their responsibility to illustrate what is expected of employees.
“The dismal performance of the business over a long period of time damns the board and management more than I or any analyst could ever do,” Sodhi said.
“Here is a company shown to be acting poorly for its customers and that has already lost billions for its shareholders.”