SYDNEY (Reuters) – Australia’s No.1 retirement and wealth management company AMP Ltd paid hundreds of millions of dollars from customers’ retirement accounts to its subsidiaries in possible contravention of trust laws, an inquiry heard on Thursday.
FILE PHOTO: Workers walk on the streets of Sydney, Australia, September 4, 2017. REUTERS/Steven SaphoreFile Photo
The allegation is the latest blow to the once-venerable firm which could face criminal charges over misconduct already uncovered by the Royal Commission inquiry into financial-sector wrongdoing.
Board documents cited at the public inquiry on Thursday revealed the payments were made without the approval of Richard Allert, chairman of AMP Super, which by law must look after retirements savings solely in the interests of customers.
Michael Hodge, a barrister assisting the commission, asked Allert whether as chairman of the trustee it “seems strange to you” that the payments would not have been legally documented.
“I understood that those arrangements were documented,” Allert replied.
“Did you ask any questions?” Hodge asked.
“I can’t remember,” Allert said.
Under questioning, Allert explained how AMP’s pension fund business subcontracted three other companies – AMP Life, NMMT Ltd, and AMP Services – in a way that resulted in hundreds of millions of dollars in payments that were not disclosed to fund members.
Hodge also pressed Allert on why some pension fund customers’ returns on cash holdings were wiped out by AMP’s fees. Allert responded that “they left the cash there knowing the return they’re getting”.
The year-long inquiry is currently examining wrongdoing in its A$2.6 trillion ($1.89 trillion) retirement sector, having already exposed widespread wrongdoing in the banking and wealth management industries.
AMP posted its worst first-half net profit in 15 years on Aug. 8 as it set aside cash to compensate customers it had sold bad advice. While it has admitted wrongdoing on a large scale, it has denied criminal behavior.
In previous hearings, the inquiry heard century-old AMP had deliberately charged clients for advice without providing it and had plotted at board level to conceal the practice from regulators.
The former blue-chip stock has lost almost 30 percent of its market value since the inquiry began in February, while its CEO, head lawyer, chairman and several directors have departed.
($1 = 1.3780 Australian dollars)
Reporting by Paulina Duran; Editing by Stephen Coates