Banking royal commissioner Kenneth Hayne QC has been told he could make a series of misconduct findings against AMP over the fees for no service issue. The misconduct could include management and the board’s role in changing a supposedly independent report about the matter, the royal commission heard on Friday.
The report into how AMP charged clients fees for services they didn’t receive went through 25 draft versions with changes from the company, the inquiry has heard.
Senior counsel assisting the banking royal commission Rowena Orr QC on Friday outlined a series of possible findings against AMP, including criminal penalties for breaches of the Corporations Act.
Ms Orr said evidence before the inquiry showed AMP and its advice licensees made 20 false or misleading statements or representations to ASIC about the extent and nature of its ongoing service fees conduct.
She said the commission could find four of the 20 misleading statements were material.
That was because they were likely to affect, or appeared intended to affect, the manner in which ASIC went about investigating the conduct, and AMP’s approach to appropriate compensation for victims.
Ms Orr said AMP’s conduct in misleading ASIC also fell below community standards and expectations. “Through AMP’s dealings with ASIC regarding the extent and nature of its fee for no service conduct, AMP adopted an attitude toward the regulator that was not forthright or honest, and demonstrated a deliberate attempt to mislead,” she said.
She told the hearing Mr Hayne could find AMP’s conduct in misleading ASIC was attributable to the company’s culture and governance practices.
“The senior management and executives who contributed to the misleading of ASIC over the two-year period had knowledge of the extent and nature of the conduct and were warned by junior staff about it being a breach, but continued with a misleading narrative to ASIC.”
Ms Orr said it was open for Mr Hayne to find the conduct in relation to the independent report by Clayton Utz amounted to misconduct. She again pointed to section 1308 of the Corporations Act, under which criminal penalties apply.
“Having regard to the changes made to the report, there is a reasonable basis for concluding that AMP, by one or more of its senior employees or officers, knew that the representation that the report and the findings made within it were entirely independent, was materially incorrect,” Ms Orr said.
She said the conduct could also be attributed to AMP’s culture and governance. “It is open to the commissioner to find that it reflects an absence of a compliance culture and a persistent and prevalent attitude at a very senior level within AMP, that it is acceptable to deal with ASIC other than frankly and candidly.”
Prime Minister Malcolm Turnbull has called for a royal commission into misconduct by the financial industry, after the big four banks wrote a letter requesting the commission.