AMP has announced it will reduce fees across its MySuper products, which will impact the company’s wealth management investment revenue by $50 million from 2018–19.
The MySuper fee reductions will affect around 700,000 AMP customers and will be effective immediately. Investment related revenue will fall by an annualised $50 million from 2018–19.
Along with the fee reductions, AMP also announced it would be accelerating its advice remediation for clients who received inappropriate advice starting in 1 July 2008.
AMP has provisioned $290 million (post-tax) for the potential advice remediation that will result from the implementation of ASIC reports 499 and 515, which require an industry-wide ‘look-back’ of advice provided from 1 July 2008 and 1 January 2009, respectively.
The company also announced its results expectations for the first half of 2018, with underlying profit estimated to be in the range of $490–500 million (taking into account the $290 million advice remuneration provision).
AMP has also estimated the advice remediation program will cost $50 million (post-tax).
AMP’s total 2018–19 dividend payout is expected to be at the lower end of the 70–90 per cent guidance range – while the interim dividend is likely to be below the range.
Acting AMP chief executive Mike Wilkins said: “Today’s announcement reflects our commitment to take decisive action to reset AMP and establish a platform from which the business can recover rapidly. We’re facing squarely into the issues that have impacted our reputation and the community’s confidence in AMP.”
“This remediation program is complex as it will address both employed and aligned advisers, and we understand it is one of the first programs to do so.
“We are working on the program with our advisers, the vast majority of whom are dedicated, professional and committed to meeting the advice needs of their clients,” Mr Wilkins said.