AMP punishes past executives, defends vertical integration

AMP Limited has confirmed that a number of former executives and board members have already paid a price for the matters raised in the Royal Commission via the forfeiture of long and short-term incentives.

However, it has defended its vertically integrated structure.

In a response to the Royal Commission released to the Australian Securities Exchange (ASX) today, AMP said the royal commission had been a catalyst for change within the company and that it would be working constructively with government, regulators, advisers and trustees to ensure change in the best interests of customers.

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It said AMP embraced the need for change and had already taken significant steps to improve culture, governance and accountability including:

  • The appointment of David Murray as an independent chair
  • The appointment of Francesco De Ferrari as chief executive
  • Board renewal
  • The appointment of Alex Wade as Group Executive, Advice
  • Acceleration of a coordinated advice remediation program
  • Appropriate consequence management including forfeiture of long ad short-term incentives for a number of former executives and a reduction in directors fees for 2018.
  • Commitment to invest $100 million (pre-tax) over two years to strengthen risk management governance and controls.

Commenting on the Royal Commission report, AMP chairman, David Murray said it would be a turning point for the industry.

However, he said: “AMP notes that the benefits of vertical integration remain available for customers while acknowledging that conflicts of interest need to be more effectively managed”.

“The proposed regulatory changes will require serious and determined effort to implement but, with the support of industry, should deliver better outcomes for customers,” Murray said.

 




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Call me cynical but the big 4 banks and AMP came out of this with a lot more skin intact than most of thought. Cutting out trail to mortgage brokers will be a huge savings to the banks. This will improve their margins. Changing the payment of fees/commissions structure such that the borrowers pay; will only stop most people from shopping around for the best deal via a mortgage broker. Loans will stick longer, again better for the lenders. Nothing really announced on vertical integration is interesting indeed.

But people were not getting the best deal from brokers. Would have been better for mortgagees to pay a bonus for the best deal. Would have been better for morgagees to shop around for themselves. Look how much money Mortgage Choice took in from fees and commissions

When people shop around for themselves they end up with a low honeymoon rate that ratchets up to a very high rate in no time without them realising it. They don't get an all important offset account. They're also likely to waste lots of time and effort applying to lenders whose underwriting criteria they don't meet.

You may want to moderate your hate a little when it comes to mortgage broking Hedware. It's clear you know even less about it than you do about super. And your union mates at ME Bank are actually fairly reliant on brokers.

Hedware why? Why such hate? Without mortgage brokers you would be living in a cave Hedware. Hedware I suspect you are a banker with the big 4 banks and just like them your greed has no boundaries. You are one of those people who drive to mortgagee sales and celebrate the misfortune of others. You celebrate out of cycle interest rates. This is what you live for. Hedware are you a bank troll?

Good luck trying to get a mortgage/refinance/cash out/top up these days by going to any lender direct. Even less chance trying to apply on line. Like an IFA you need to find an unaligned broker with at least an ACL to get the best outcome. Problem is nearly all of them are connected/aligned with the less than a handful of major aggregators and franchisees which are all now owned by the banks anyway! However the smarter borrowers/investors out there stick to their smart independent broker that knows how to massage and present the loan to the right lenders and even the right lenders this week may be the wrong ones next time around. Its an amazing specialised skill that is required right now. Your comment does show a lack of understanding of the mortgage broking industry.

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