Australian Treasurer Scott Morrison yesterday said that the corporate regulator, the Australian Securities and Investments Commission (ASIC), was investigating false or misleading statements that had been made to it over financial advisory services and fees.
Executives at AMP, Australia’s largest wealth manager, admitted on Tuesday that the company had lied to ASIC for almost a decade to cover up its practice of charging thousands of customers for services it did not provide. The admission was made to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, that was formed in December 2017 and that started its hearings this week.
Mr Morrison said that ASIC has been investigating and continues to investigate the matters that were raised in the Royal Commission. ASIC is also pursuing full compensation for AMP clients affected.
He said, “What has occurred here and what has been admitted to in the Royal Commission by AMP is deeply disturbing. They have said that they basically charged people for services they didn't provide and they have admitted to statements that were misleading to ASIC and to their own customers, and this is deeply distressing. This type of behaviour can attract penalties which include gaol time. That's how serious these things are.”
He added, “There are a range of other measures, the Enforcement Review that is under way which is looking at strengthening penalties and powers as well in relation to these issues. We have already given ASIC greater resources. We have the Financial Complaints Authority which is coming in later this year. So, there is a very strong check list of things that are being done.”
He said that there needs to be a broader inquiry into the issues and also superannuation which is yet to appear before the Commission.
The Commission is currently focusing on the provision of financial advice by AMP and the four largest banks: CBA, Australia and New Zealand Banking Group, National Australia Bank and Westpac Banking Corp. The inquiry will turn its attention later to large insurers and pension funds.
In further testimony to the Commission yesterday, AMP executives also admitted that the company had charged users of online platforms for advice fees despite not receiving the permission required by law.
Also, executives of the country’s largest bank, Commonwealth Bank of Australia (CBA) yesterday said CBA was the worst of the country’s big banks when it came to charging fees for services it did not provide. The inquiry heard CBA took more than two years to inform ASIC of the issues.
In a statement confirming its investigation into AMP “fees for no service” debacle, ASIC said, “More broadly, all financial institutions need to understand the importance of co-operating with the regulator and complying with the law when providing information to ASIC. Making false or misleading statements to ASIC can result in civil and criminal sanctions.”
The regulator added, “In accordance with our general policy on public comment we will not make further public statements about our investigation of these matters at this time.”