AMP’s new chief executive Francesco De Ferrari is promising a “good, new” business. (ABC News: Jerry Rickard)
Since the banking royal commission revealed greed and dishonesty at one of Australia’s oldest financial institutions, AMP, the company has been losing customers and bleeding cash.
- New AMP chief executive Francesco de Ferrari promises to turn company around
- He says he will transform the culture and provide more accountability
- Investors and customers are yet to be convinced that AMP has learnt anything from the banking royal commission
AMP’s new chief executive Francesco De Ferrari may be the last chance to turn things around.
He’s launched a billion-dollar plan to transform the company, but customers and investors are wondering whether it will work.
“I talked to a lot of clients, a lot of investors — everybody said ‘help us draw a line in the sand as to the bottom of this company,'” he told 730.
He has launched a three-year, billion-dollar plan to save AMP by raising extra capital, reducing costs, and selling off AMP’s life insurance arm.
But he acknowledges it is difficult to comment on how AMP’s culture managed to deteriorate so far.
“Many corporations lose their way,” Mr De Ferrari said.
“What I generally tell the employees, having gone through transformations like this before, is we have to be proud of our past, but realistic about the present, so we can be optimistic about the future.
“What we’re aiming to do is … transform our culture, drive more simplicity and accountability, and I think that will solve the problem.”
‘A fee and charge for everything’
Former AMP customer Jeff Condren will take some convincing.
His 3D printing company, SOS Components, went into liquidation in 2014.
“I got major depression, PTSD, anxiety, I haven’t been able to work. I can’t even get a job at the local tip,” he told 7.30.
Most of what he had left after the company went under was in his superannuation nest egg with AMP.
But he says his money was being eaten up by AMP’s fees.
“When it comes down to fees and charges, there’s a fee and charge for everything, and that’s literally everything,” he said.
Mr Condren says he asked AMP to move his retirement nest egg to a different superannuation product, but AMP told him he needed personal financial advice.
“I paid $2,500 to the agent and I think that the financial plan that they produced was absolute rubbish and was of no benefit to me at all,” he said.
In July 2019 he rolled his superannuation over to a different fund, but he says money had been taken out when it was rolled over.
“I thought this is fairly typical of what AMP is, they’ve learnt nothing from any of the trauma that they’ve gone through with regards to the banking royal commission,” he said.
AMP said it is taking Mr Condren’s case extremely seriously, and it has contacted him to resolve his issues as soon as possible.
‘AMP still don’t get it’
Former AMP chief executive Craig Meller stood down after the Banking Royal Commission. (AAP/Dean Lewins)
Australians have put their money and their trust in AMP for 170 years.
That trust was destroyed over just a few days in April 2018 by the revelations at the banking royal commission.
Commissioner Kenneth Hayne heard evidence that AMP had charged dead people for life insurance.
AMP had also routinely charged some of its customers for financial advice they would never receive, and lied to the corporate regulator.
In the wake of the disclosures, chief executive Craig Meller and chairman Catherine Brenner quit, along with directors Vanessa Wallace, Holly Kramer, and Patty Akopiantz.
But customers, investors, and ultimately regulators will be wondering whether AMP has really learned anything from the royal commission.
The Australian Shareholders’ Association’s Ian Graves said despite the new leadership a cleanout of middle management is needed.
“With an organisation as large as AMP, it’s like turning the Queen Elizabeth — it takes a long time from when you turn the wheel until it actually turns,” he told 7.30.
“AMP still don’t get it, as regards what the shareholders are looking for, and also the public and also their customers.”
Brett Le Mesurier from investment house Shaw and Partners says Mr De Ferrari’s plan is expensive and won’t be easy.
“If he achieves what he said he’s going to, then he’ll go down in AMP folklore as the guy who saved the company and turned it around,” he told 7.30.
“But if he fails, the consequences of that are quite significant.”
‘What are we paying for?’
After the royal commission, Catherine Croll started questioning the fees AMP charged her. (ABC News)
Catherine Croll couldn’t be further from the Sydney boardroom of AMP.
She is a community arts worker in the Kimberley region of Western Australia.
“I earn less than $15,000 a year, but I love what I do,” she told 7.30.
Ms Croll has trusted AMP to look after her retirement nest egg for the past 20 years.
When she lost much of her superannuation in the global financial crisis, she turned to AMP for help.
“I rang my financial advisor, who was listed on my policy, only to be told that he’d left several years ago, which I found quite disturbing, because his name was definitely still on my policy,” she said.
The banking royal commission made her question her trust in AMP.
“Many people like myself, I think, would have suddenly wanted to read all those statements and actually find out what’s happening, what fees and charges are being levelled against us?” Ms Croll said.
“And what we’re actually paying for?”
In a statement provided to 7.30, AMP said:
“AMP takes all customer complaints extremely seriously and we’ve contacted both Ms Croll and Mr Condren to understand their issues and resolve them as soon as possible.”
“Our Customer Advocate team is also reviewing both customers’ circumstances to ensure fair and reasonable outcomes.”
Paying back the customers that AMP has wronged will take years, and it is expected to cost $778 million.
“We are working on remediation, we’re working on fixing our legacy issues,” Mr De Ferrari said.
“We want to put the past behind us and start building a good, new, future business.”