By Georgia Comensoli and James Fitzpatrick
AMP’s response, in a media flooded with accusations
After years of pressure from corporate watchdogs, politicians (on both sides), media, whistle blowers, and special interest groups, the Banking Royal Commission (BRC) was established. For some it’s been a long time coming while others are wishing they jumped ship before December last year.
The BRC’s task is to uncover misconduct and unlawful behaviour at Australia’s largest financial institutions. AMP Limited, one of Australia’s oldest financial advisory firms, is in the firing line.
Investigations have detailed extensive misconduct. Facing criminal charges and large financial penalties, AMP’s market value has dropped by $4 billion.
How did they respond?
AMP’s CEO Craig Meller fell on his sword. He was the first executive to lose his job over the Commission. His sensational resignation was accompanied with an unabashed apology to AMP customers, apologising for the company's previous behaviour including lying to ASIC for over a decade about charging customers fees for financial advice that was never delivered.
“This is not the AMP I know and these are not the actions our customers should expect from the company… I do not condone them or the misleading statements made to ASIC.” Meller said in a statement made in a press conference (see ABC, April 2018).
This was a big (and very public) move – and was followed by other casualties; within weeks, four other board members stood down, including Chairman, Catherine Brenner.
AMP have now lost all their female board members.
“We let you down” (see The Guardian 2018)
In statements made over the past few months, AMP’s main message has been to address the demands of shareholders wanting accountability and a need for change. To kick-off the company’s recent AGM, interim CEO Mike Wilkins noted that the company had let down shareholders and customers. He added that individuals should control their language throughout proceedings; showing the need for damage control at the start of the annual general meeting.
Rarely do you see such distrust shown from shareholders towards the board of trustees. At least Wilkins was willing to accept accountability.
Around six months after the launch of the BRC, AMP published a media release on their website for media and shareholders. The release:
acknowledges the disappointment felt by all - particularly clients and investors; and
declares they have been trying to change processes over the last two years (despite this period involving lies to the corporate watch dog) before detailing their actions.
What they're doing
1) AMP charged customers for financial advice they never received. They stopped that in November 2016, and have refunded those involved.
2) AMP did not provide ASIC with accurate or complete information about these problems in a timely manner - now they’re conducting a complete review, including actions to rebuild their trust and relationship with ASIC.
3) There is now a process in place to compensate customers who received inappropriate advice from their advisor.
4) The CEO and Chairman stepped down, accepting the issues that ensued during their leadership – taking accountability for their actions.
AMP have publicly recognised what they have been charged for in the BRC and discussed what they will do to improve their processes - including responding to shareholders and clients.
What did AMP do well in their response?
When Craig Meller stepped down as CEO, he openly discussed why he was resigning. He identified the issues that occurred throughout his leadership and responded to shareholders demanding change in leadership.
AMP’s public statement from interim CEO Mike Wilkins (posted on their website and sent as a letter to key stakeholders) detailed what they know, the accusations held against the company, the steps the company was taking to deal with each issue, and how clients and shareholders would be compensated. Wilkins acknowledged the damage caused and the need to rebuild the company’s stakeholder relationships.
How could they have improved their response?
AMP provided statements through the resignations of their directors and executives but didn’t post an official statement from the company until well into the BRC. While their statement (once published) was good, it was too late.
We would have liked to see a statement released as soon as the major accusation of attempting to hide information from ASIC broke. AMP’s leaders allegedly knew of this misconduct since November last year; enough time to prepare a response for when the story broke.
AMP faces a huge hangover from the BRC; sourcing and replacing half a board, including a new CEO, and re-gaining trust from their shareholders, clients and regulators.
To succeed, AMP should focus on transparency. Take their time dealing with each and every issue raised and identify what is needed to move forward.
Open, quick, and regular communication is essential when responding to a crisis.