Banking inquiry: Chair resigns as AMP faces fourth class action

Law firm Phi Finney McDonald is preparing a class action against AMP for misleading investors, as three other firms continue to investigate potential action.

AMP is facing a fourth potential shareholder class action after law firm Phi Finney McDonald announced it is preparing action against the wealth management giant for misleading investors and breaching continuous disclosure obligations.

Following the resignation of AMP chair Catherine Brenner on Monday, Phi Finney McDonald said the class action will seek compensation for investors after revelations at the banking royal commission that AMP could face criminal charges for charging customers fees for services that were not provided.

Shine Lawyers, Slater and Gordon and Quinn Emanuel Urquhart & Sullivan, last week said they were each investigating class actions against AMP.

"ASX-listed companies need to properly compensate their investors when their misleading conduct causes them loss."

He said the class action, which is backed by litigation funder IMF Bentham limited, will be open to all shareholders "aggrieved" by AMP's misconduct.

AMP's market value has fallen by $2.3 billion since its executives began giving testimony to the royal commission a fortnight ago, with its shares down a further 0.5 per cent to $4.00 by 1250 AEST on Monday.

The 169-year-old company has admitted it charged customers fees for financial advice that was never delivered, and repeatedly lied to ASIC about its behaviour.

The scandals uncovered during the royal commission have forced Ms Brenner, AMP chief executive Craig Meller, and group general counsel and company secretary Brian Salter to step down as the company tries to rebuild trust with customers.

Brenner 'deeply disappointed'

Catherine Brenner has resigned as chair of the financial services giant AMP, effective immediately, to be replaced by Mike Wilkins who will be interim executive chairman.

She is AMP's second high-profile casualty of the banking royal commission, after chief executive Craig Meller resigned over the fees-for-no-service scandal.

The company announced that Group General Counsel and Company Secretary Brian Salter will also leave the company.

Ms Brenner said she was "deeply disappointed" by the issues raised at the royal commission and the impact it has had on customers, employees, advisers and shareholders.

"As chairman, I am accountable for governance," Ms Brenner said.

"I have always sought to act in the best interests of the company and have been in discussions with the board about the most appropriate course of action, including my resignation."

Turnbull says Brenner made the right call

Prime Minister Malcolm Turnbull said Ms Brenner had done the right thing. 

He noted the government had put forward a suite of measures to stop a repeat of shocking revelations heard by the commission in the past two weeks.

Board directors must be accountable for any wrongdoing, the prime minister said.

"They have got to take responsibility for what has gone on and take the appropriate steps," Mr Turnbull said.

"In some cases that has involved people stepping down or retiring or resigning."

AMP defends changes to Clayton Utz report

AMP said Ms Brenner, Mr Meller and the other directors had done nothing wrong with regard to an external report it commissioned - and then repeatedly reviewed - into the fee-for-no-advice scandal.

Catherine Brenner has resigned as AMP chair a week after former CEO Craig Meller (left) stepped down.
Source: AAP

Mr Wilkins said AMP was treating the scandal seriously and that customer remediation was the priority while it fast-tracked the search for a new chairman and director.

The former IAG chief executive did not mention the CEO position, which he has been filling on an interim basis since Mr Meller quit on April 20.

The wealth management giant faces possible criminal charges after the royal commission heard it deliberately and unlawfully continued charging fees to "orphan" clients - those who no longer had an adviser - for three months despite them not receiving advice services.

AMP group executive for advice Jack Regan admitted that a letter to ASIC claimed clients were at fault for being charged ongoing fees, when in some cases it was the result of a conscious effort by AMP.

He also admitted that he marked up changes to draft versions of the Clayton Utz document while the board also made changes before it was signed off.

"The board, including the former chairman, were unaware of and disappointed about the number of drafts and the extent of the group general counsel's interaction with Clayton Utz during the preparation of the report," AMP said.

AMP will be making a formal submission to the royal commission by May 4, in response to the matters raised.

 


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Published 30 April 2018 at 8:06am, updated 30 April 2018 at 7:45pm