ASIC’s throwing its legal weight around James Hardie’s former boardroom, but it looks like AMP continues to escape lightly from the ballooning scandal involving dodgy and conflicted advice by some, perhaps many, of its financial planners.

From “only” 7000 or customers being looked at in case planners put their commissions before appropriate advice, AMP has fessed up to 35,000 – nearly 5% of its entire customer base.

As we’ve been reporting since the scandal broke last year in the wake of ASIC’s “shadow shopping” exercise, AMP has been trying to downplay the possibility that some of its financial planners do the obvious thing and offer the advice that earns them the most dollars.

AMP has certainly been earning dollars, it’s annual profit knocking on the door of $1 billion, but despite, or perhaps because of the rivers of money pouring into its vault from the bull market and government superannuation policy, AMP is pulling up short of wanting its “financial planners” to offer the very best advice without conflict of interest – which is why there remains a serious doubt about whether they are AMP salespeople, rather than financial planners.

And ASIC’s treatment of AMP remains sharply at odds with the force it dropped on a single Macquarie Bank employee who did pretty much what scores of AMP “financial planners” have been doing – switching customers out of lower-fee super funds into AMP products.

AMP remains defiant. It’s financial services division MD Craig Dunn’s told the SMH “most” customers were better off as a result of the advice they received. In this regard, AMP’s bacon has been saved by its funds managers outperforming over the past year – it could very easily have gone the other way.

But the bottom line belongs to CEO Andrew Mohl, who said management of the planners’ network had been overhauled and steps taken “to reduce” conflicts of interest. Note, it’s only reducing, not removing the obvious conflicts of commission-driven models.

If you go to an AMP financial planner, he or she is not authorised to recommend you put your super in one of the top-performing, low-fee industry funds, such as MTAA.

The reforms are meant to result in AMP products offering the same planner remuneration as products from other firms, but MTAA and its like are not options. Of course, MTAA doesn’t pay commission.

The bottom line for AMP seems to be that advice is “appropriate”, not “best”.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey