“For a little while, things actually get harder,” he said.
For a little while, things actually get harder.
AMP chairman David Murray.
Mr Murray said AMP was more exposed to the findings of the royal commission, including recommendations regarding how super trustees behave, oversight of financial planners and treatment of commissions, while warning on the need for sensible legislation.
“For a wealth manager the size of AMP, the implications for our business are proportionally larger than many other institutions, given the focus on advice and superannuation.”
Mr Murray said AMP was shown to have “faltered from its purpose”.
“The business was too slow to identify customer issues and take appropriate action.
“In hindsight, investment in monitoring and systems was not adequate for the complexity
of the business,” he said.
“The board has taken firm decisions on consequence management and those accountable for issues highlighted in the royal commission are no longer with the business.”
Mr Murray copped a near 13 per cent protest vote against his appointment as chairman, while the company recorded an 10.7 per cent protest vote against its remuneration report – far less than the whopping 61 per cent protest vote it recorded a year prior.
AMP also announced on Thursday that chief financial officer Gordon Lefevre would leave after five years in the job. He will be replaced by John Patrick “JP” Moorhead, who is currently chief financial officer of AMP Capital.
Mr Lefevre’s departure follows those last year of former chief executive Craig Meller and former chairman Catherine Brenner. Mr Meller was replaced by Francesco de Ferrari and Ms Brenner was replaced by David Murray.
Several shareholders expressed their concern about the company’s ability to change its ways.
“AMP had been a pillar in the financial and insurance sector but the management forgot its core purpose,” one shareholder referred to only as Mr Manuga said during the meeting.
“Normally when the new management takes over the share price goes up. This probably happens because the financial analysts and the fund manager expect the turnaround in the organisation. In the case of AMP it has not happened despite the steps taken by the new CEO.”
Australian Shareholders Association company monitor Ian Graves challenged the company on why it had not written down the $1.5 billion in goodwill on its balance sheet for its challenged wealth management business.
Mr Murray responded by saying, “if things on a more permanent basis change dramatically, our accountants would require us to rethink the goodwill but that has not yet happened.”
AMP reported cash outflows of $1.8 billion from its Australian advice business in the first quarter of 2019, adding to the exodus of funds from the troubled group. This compared to $200 million in the prior corresponding quarter.
AMP’s shares slide 2.6 per cent to $2.20 after the update.
Fewer customers also gave AMP their superannuation during the quarter, with cash inflows drying up to $4.69 billion – a $1.3 billion reduction on the same time a year earlier.
Mr de Ferrari said AMP was focused on transforming its business.
“Cash flows in Australian wealth management continue to be challenged given the post-royal commission environment,” he said.
“We remain focused on transforming our business model in Australian wealth management to compete more effectively.”
Mr de Ferrari said AMP had lowered fees to improve customer outcomes on its MyNorth products, building on the MySuper fee cuts in 2018.
“We’ll continue to modernise our products to put AMP in a position where we can win in the market.”
Sarah Danckert is a business reporter.