Not only is AMP in denial about the ethical shortcomings of some of its financial planners, the company’s top management simply doesn’t want to know – making the enforceable undertaking deal done with ASIC look like window dressing.

AMP is abiding by the letter of the deal, but there’s a certain moral weakness about its execution that reeks of hubris. The message I received in an interview with AMP CEO Andrew Mohl for Eureka Report is that the company simply isn’t concerned about having thousands of customers switched out of low-fee industry funds into AMP products by financial planners who picked up commissions for doing so.

Contrary to impressions that might have been gained when the ASIC enforceable undertaking was announced, there is no automatic review of the 7,000 identified switching cases. AMP won’t even write to those customers until the month after next and then it will be just to offer them a review if they want one.

The inertia factor alone will be considerable, but more importantly, the shonky behaviour of some AMP salespeople and the company’s indulgence of them will be papered over by the strong performance of AMP’s fund managers over the past couple of years. With AMP doing well on asset collection, the former industry fund customers might not notice they’re paying much higher fees.

That’s the joy of a bull market – no-one cares about much at all really when everything’s going up. When I pressed Mohl about perhaps wanting to know rather urgently about what his planners were up to, he replied:

Well that’s why we’re going to write to those customers and offer them that review and just recognise that the funds that they’ve been invested in have been some of the highest performing funds in the market so at this point in time we’ve had no complaints. We have no basis to believe that any number of customers have actually incurred any disadvantage.

See, no-one’s done anything wrong, there is no inherent moral hazard in the commission model and AMP doesn’t want to know as long as the money keeps rolling in.

Peter Fray

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