Has AMP super finally overcome Royal Commission fall-out?
ANALYSIS
There is deep significance for AMP Limited in being able to state that, for the first time since 2017, it has experienced positive net inflows into its superannuation funds.
Why? Because from being an acknowledged default destination for corporate superannuation funds, AMP took a significant hit almost from the very beginning of the Royal Commission into Misconduct in the Banking and Financial Services sector.
There was a period when consultants privately acknowledge that the reputational damage suffered by AMP was such that, when looking at options for successor fund transfers, the company was simply not being put on many shortlists.
Where AMP suffered, a number of industry superannuation funds benefited, not least Australian Retirement Trust (ART) which was perceived as being safe, well-resourced and moderate.
The reputational burden carried by AMP in terms of superannuation was not helped by the ongoing negative publicity which has flowed from the Royal Commission and subsequent events, not least the fact that in late 2022, the Australian Securities and Investments Commission (ASIC) announced that the Federal Court had ordered five AMP companies to pay a total of $14.5 million in penalties “for charging fees for services that were not provided to 1,452 superannuation members”.
“These members had been paying fees in return for access to general financial advice as part of an agreement between their employer and AMP. On leaving their employer, the members continued to be automatically charged the advice fee, despite no longer having access to the advice services for which they were being charged,” ASIC said at the time.
Thus, AMP Limited had good cause to celebrate within its announcement of second quarter cashflows that its superannuation business had finally turned things around with positive net flows of $33 million representing a significant reversal of the net cash outflows of $99 million experienced in the prior corresponding period.
This also needs to be seen in the context of former AMP chief executive, Craig Meller noting during the company’s 2016 briefing that net cash flows from the firm’s contemporary corporate superannuation businesses were up 81% on full year 2014 to $1.3 billion.
“…and this includes flow from mandate wins over $500 million,” he said at the time.
In yesterday’s ASX update, AMP said the $33 million in positive inflows reflected the impact of ongoing initiatives, including the launch of digital of digital advice and the recent rollout of AMP Lifetime Super to around 140,000 Choice members.
There was an interesting article in The Australian on the weekend which talked about class action litigation.
AMP like Qantas, Optus and a bunch of others have been subject to class action litigation which never seems to end.
Where were these class action litigants when industry super funds had member data taken and some member money was stolen?
The AMP class action lawyers are union aligned, just like “Industry” super funds. Regardless of the outcome of these class actions, they are causing reputational damage to AMP, and undermining the confidence of AMP clients who are constantly bombarded with legalistic looking messages. All of which benefits AMP’s union super competitors.
One wonders if the union law firms are ultimately being underwritten by union super funds to conduct these relentless class actions?
If everyone keeps leaving eventually you will receive some positive news. The same will happen with financial planner numbers once they reach a much lower figure than the current level. This doesn’t mean it has turned the corner, it simply means it has stabilsed prior to falling in the future. In addition “positive net inflows” with the SGC payments that are made isn’t much of a benchmark (ie) the SGC gives them a decent head start.
Whilst the share price has gone up those advisers that AMP threw under the bus when they illegally changed the BOLR contracts are still awaiting their money from the class action that AMPFP lost. Whilst a good percentage of those that were financially destroyed by AMPFP have left financial planning those that remain remember and I for one will make sure that I remind everyone of what a morally bankrupt firm AMP is at every opportunity I get.