AMP confirms $200 million more in advice remediation

AMP Limited has braced the market for a profit of just $30 million, in an update released to the Australian Securities Exchange (ASX) today, including an additional $200 million in advice remediation.

It said that while the 2018 financial year results were still being finalised, AMP expected to report an underlying profit of around $680 million and a profit attributable to shareholders of approximately $30 million and attributed the result to a range of previously advised items such as the Royal Commission response, portfolio review, increased investment in risk, governance and controls and advice remediation.

It said that an additional provision for advice remediation of $200 million was no expected to be recognised at 31 December, 2018.

It said the provision contained two items that had previously been disclosed as estimated – program running costs of $186 million and customer lost earnings of $14 million.

Elsewhere in its ASX announcement the company said that earnings in its retained businesses were expected to be impacted by external market conditions, the regulatory environment, implications of the future strategy and a number or previously advised factors including the full-year impacts of the MySuper pricing changes to Australian wealth management of $35 million and unwinding the external distribution arrangements and adjustments for tax and products transferring to Resolution Life.




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The cost of repayment is madness and the penalties estimated has double edged effect causing uncertainty in the market. The public still has not realised that the Royal Commission was an investigation into bad conduct. Good conduct has been 100% excluded. Have we forgotten that in the vast majority of cases, there has only been good conduct. However, focussing purely on bad conduct consistently only under minds and the brain washing continues. Think of the legend of Pierre the bombardier pilot.

Only a handful of commercial airlines are involved in serious incidents every year. We don't hear about the tens of thousands of aircraft journeys that take place every day. By some estimates there are now 1,000,000 people in the air at any one time. We have a right to expect that when we get on an aeroplane we will arrive at our destination safely.
We have a right to expect similar things from the finance sector. The fact that millions and millions of people travel safely every year doesn't excuse the airlines when people are killed or injured. Nor does the good conduct of financial institutions excuse them for poor and in some cases outright atrocious conduct. The aim in the finance sector, just as it is in the airline industry should be to stop things going wrong by shining a light on them, identifying the route cause and fixing the processes or behaviour that caused the problem to ensure it doesn't happen again.

Reasonable point, but I'm not sure anyone is saying that the problems shouldn't be fixed. What many in the industry are saying is the problems shouldn't be misrepresented as much more widespread than they actually are. Unfortunately with the decline in media standards in recent years, particularly at the former quality end occupied by ABC & Fairfax, this is what has happened.

To use your aircraft analogy, if consumers were misled by the media into believing that crashes occurred far more often than they actually do, they are more likely to avoid aircraft travel and use other methods such as road transport instead. Not only is road transport slower and less efficient, it has a much higher accident rate. Consumers would be much worse off.

This is what's happening with financial planning. Due to media exaggeration and hysteria, fewer consumers are now benefitting from good quality financial strategies and products. More are being sucked into speculative scams and dodgy direct products. Many are choosing to just do nothing, and are wasting valuable time and opportunities to improve their financial situation.

Still not much reassurance to those who have lost the savings, livelihoods and in some cases even their lives (suicide) as a result of the behaviour of some financial institutions. The reality is that the industry must strive for 100% success even if that is not absolutely achievable and all of us who work in the sector should stop trying to shoot the messengers i.e. the Royal Commission and the media, when things have been proven to have gone wrong.

Get rid of the inept Institutions from our Industry. We dont want them !

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