AMP’s chief executive, Michael Wilkins, yesterday told the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that education has been key to adviser improvement.
Counsel assisting, Michael Hodge, questioned Wilkins why AMP’s advisers took five years to understand that they had to provide services in exchange for fees, to which Wilkins blamed reforms for the lag.
Wilkins said the adviser network had to “find its way” after the Future of Financial Advice reforms, but following the introduction of education reforms and new audit processes, advisers were starting to place themselves well.
Conceding that education has played a role in advisers’ improvement proves a pretty strong case for the Financial Advisers Standards and Ethics Authority’s (FASEA’s) new reforms, which aim to up the professional standard of advisers in the industry.
Wilkins also told the Royal Commission that the remediation costs had increased from $291 million post tax to $778 million. He said the figure jumped from $415 million pre-tax once AMP made provisions of around $50 million, and $50 million per year in costs to run the program.
Wilkins said the remediation process was expected to take up to three years to fully implement as opposed to 18 months as they initially thought. He said the lag was, in part, due to disagreements on some aspects of the remediation process between the firm and the Australian Securities and Investments Commission (ASIC).
One of the matters in dispute related to what evidence could be used to show whether services were provided to the client, and the other was treatment of issues where services were provided in part.
Wilkins said that banning grandfathered commissions would impact AMP’s business and told Commissioner Kenneth Hayne that the industry would require a further adjustment period of up to three years before completely ridding the commissions.