In its annual report, released on Wednesday (20 March), AMP’s new chief executive officer, Francesco De Ferrari, told shareholders that 2019 will be a transitional year for the company as it completes the sale of its wealth protection business and continues work on its hefty remediation program.
AMP’s 2018 results included a provision of $430 million (post-tax) for potential advice remediation, inclusive of program costs, in relation to ASIC reports 499 and 515, which require an industrywide ‘look back’ of advice provided from 1 July 2008 and 1 January 2009, respectively.
“Our first priority is the separation of our wealth protection and mature businesses, which will help simplify and create the basis for a more agile AMP,” Mr De Ferrari said.
“Our second priority is the delivery of our advice remediation program to compensate impacted clients. We are focused on doing this as quickly as possible. Lastly, AMP is focused on getting our risk, governance and control settings right. This includes placing ethics and risk at the core of our culture.”
Following the sale of the wealth protection and mature businesses, AMP will have four core operating businesses – wealth management in Australia and New Zealand, AMP Bank and AMP Capital.
“Our wealth management business in Australia has foundational assets and strong market positions. However, the business model is challenged and we need to reshape it for the future,” the CEO said. What shape the new AMP wealth business takes remains to be seen.
“In New Zealand, our wealth management business continues to deliver resilient earnings for the group. Our opportunity is to become an advice-led wealth management business,” Mr De Ferrari said.
AMP Capital has a strong growth trajectory, particularly internationally. AMP Bank has performed well and can be further leveraged as part of our wealth management offer.
In its director’s report, AMP provided extensive commentary on the key risks to the company, which has faced significant challenges throughout 2018.
“Given the nature of our business environment, we continue to face challenges that could have an adverse impact on the delivery of our strategy,” the company said, adding that the most significant business challenges include business, employee and business partner conduct.
“The conduct of financial institutions is an area of significant focus. There is a risk that business practices and management, staff or business partner behaviours may not deliver the outcomes desired by AMP or meet the expectations of regulators and customers” the company said.
“An actual or perceived shortcoming in conduct by AMP or its business partners may undermine our reputation and draw increased attention from regulators. Our code of conduct outlines AMP’s expectations in relation to minimum standards of behaviour and decision-making, including how we treat our employees, customers, business partners and shareholders.”
