Thank you Chair, and good afternoon.
I would like to start by acknowledging the misunderstanding regarding my absence from the Committee last November. As Alex runs our superannuation business, we felt he was best placed to give evidence and answer your questions. That does not detract in any way from the fact that I am ultimately accountable for the conduct of our company and am always ready to assist the Committee.
Alex and I appreciate the invitation to be here today, as we are both passionate about the need for accessible, affordable financial advice. This is an industry facing significant challenge with the Royal Commission highlighting a number of systemic issues across the sector.
At AMP, the Royal Commission has been a profound catalyst for change. The issues raised were unacceptable and I would like to reiterate our unreserved apology to the clients we let down.
We are working hard to earn back their trust.
We have renewed our purpose, reshaped our portfolio, reset our strategy, and embarked on a three-year program to reinvent our business. Virtually no aspect has been untouched, starting from the top with complete board renewal, and streamlining and strengthening of the management team.
In the past 18 months, we’ve been working on a number of complex but fundamental priorities to restore trust:
- First is putting things right for clients. Progressing our remediation program and this has been paramount and this program is on track to be 80 per cent complete by the end of the year and fully complete by 2021.
- Second, we’re focused on implementing the Royal Commission’s recommendations. This includes removing grandfathered commissions from all AMP products, as well as replacing ongoing service fees with annual agreements ahead of the required, legislative timelines.
- Third, we are streamlining our portfolio and restructuring our go forward businesses to be centred on client needs. The sale of our life insurance business to Resolution Life completes today and is a fundamental step forward in allowing us to simplify our product set to improve client outcomes.
- Fourth, we are strengthening our governance, risk management and controls, focusing on fixing legacy issues at the root cause.
- And fifth, we are transforming our culture. Reinventing the business is only half the story so we’re embedding new behaviours, improving execution, conduct management and accountability.
It’s an ambitious agenda and we have made good progress in driving change at every level of the business, but we recognise there is more to do.
Turning now to the wider advice industry. Following the exit of a number of the major players, the sector’s structure is fundamentally changing. Ownership is shifting from large institutions backed by strong balance sheets and becoming more fragmented with many small, geographically dispersed, and often less-well capitalised businesses.
This seismic shift comes at a time when the need for accessible, affordable advice has never been greater. According to ASIC’s research published last year, 1 in 2 adults had unmet advice needs and only 12 per cent of the population received advice. This year, COVID-19 has presented additional, unprecedented challenges. The current market volatility, historically low interest rates and beginnings of a recession are conditions that many Australians have not faced before. It is concerning that so many people are making critical financial decisions in this environment without the guidance of a professional adviser who can explain the long-term impacts of their choices.
The challenge of how to provide professional and affordable advice – not just for the wealthy but for the average Australian for whom it matters most – is the main reason both Alex and I joined AMP.
We are working to fix the issues of the past and ready to engage with all stakeholders to build a fit for purpose advice model for all Australians.
We are happy to take the committee’s questions.