Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

AMP CEO Steps Down Amid Dodgy Advice Scandal

AMP Limited (ASX: AMP) has fired its CEO, Craig Meller, and commenced an immediate review of its governance and reporting following recent questioning by the Royal Commission. 

AMP Limited (ASX: AMP) has fired its CEO, Craig Meller, and commenced an immediate review of its governance and reporting following recent questioning by the Royal Commission.

AMP is one of Australia’s largest financial planning groups and is the name standing behind many smaller financial planning offices.

Royal Commission

A recent round of public questioning, undertaken during the Royal Commission into the banks and the financial services sector, has seen many skeletons fall out of the darkest closets of AMP and Commonwealth Bank of Australia (ASX: CBA).

Westpac Banking Corp (ASX: WBC), ANZ Banking Group Ltd (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB) haven’t been immune either.

Read: Royal Commission Takes Aim At CBA, AMP, Westpac, NAB and ANZ’s Financial Advice.

The Royal Commission followed repeated news headlines of below-standard advice, scandals and allegations of poor culture among major advice groups.

ASIC recently released its findings of an in-depth analysis of financial advice businesses controlled by the five big players. 

In 75% of the advice files from the big banks, the financial advisers did not demonstrate compliance with the duty to act in the best interests of their clients.

More concerning was that ASIC found: “10% of the advice reviewed was likely to leave the customer in a significantly worse financial position.” 

You read that right — “significantly worse”.

Customers would have been better-off not seeing the advisers in the first place! 

Money For Nothing

One of the key points from this week’s public hearings is the fees charged to clients who didn’t receive any advice. It’s called, “fee for no service”.

No, it’s not the title of a Dire Straights song.

But it is wrong. No-one should pay for things they don’t receive.

Aussies Deserve Better

Earlier this week, AMP fronted the Commission and its head of financial advice, Jack Regan, forgot how many times his company misled ASIC, the regulator, with false or misleading statements.

But it’s not just AMP.

News.com.au wrote an article this week titled, “Dead CBA clients charged advice fees”

Mellor Steps Down

“I am personally devastated by the issues which have been raised publicly this week, particularly by the impact they have had on our customers, employees, planners and shareholders,” Mr Mellor said.

“I do not condone them or the misleading statements made to ASIC. However, as they occurred during my tenure as CEO, I believe that stepping down as CEO is an appropriate measure to begin the work that needs to be done to restore public and regulatory trust in AMP.”

Takeaway

The buck should stop at the CEO.

But we cannot blame one man for these outcomes.

The entire industry needs a shake-up because conflicted incentive schemes can eventually lead even well-intentioned advisers down the wrong path.

Of course, not everyone who works for these organisations has given poor advice to clients. But the only person who should pay an ‘expert’ is a client, either directly or via their employer. It should be a flat fee. Simple.

There’s a reason drug companies don’t offer doctors huge commissions to flog prescriptions.

As Charlie Munger says:

“Never, ever, think about something else when you should be thinking about the power of incentives.”

Did you know it’s free to join The Rask Group’s Investor Club Newsletter? It’s a regular (usually weekly) news and educational update on financial markets, investing and unique strategies. Join today and get ready to laugh and learn.

Click here to join The Rask Group’s Investor Club Newsletter Today

 

Hey, you, read this disclaimer: This article contains information only. It is not financial advice. It is no substitute for trusted and licensed financial advice and should not be relied upon. By using our website you agree to our Code of EthicsDisclaimer & Terms of Use and Privacy Policy. Also, don’t forget, past performance is not a reliable indicator of future performance. 

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content