AMP has confirmed its superannuation trustees have entered into a court enforceable undertaking (CEU) with the Australian Prudential Regulation Authority (APRA) involving $45 million in remediation for historical matters of two of its trustees.
The two trustees were AMP Superannuation Limited and N.M. Superannuation Proprietary Limited, which APRA had imposed extra licence conditions on in 2019 due to matters related to APRA’s ongoing prudential supervision and matters that arose to the Royal Commission.
AMP had reported the two issues which had been acknowledged by APRA, and AMP expected all matters referred to APRA from the Royal Commission would be concluded.
The firm said it expected the costs related to rectification and remediation would be in the range of $40 million to 45 million.
APRA said its decision to accept the CEU followed a lengthy investigation into past conduct that it believed led to a number of potential breaches by AMP Super of the Superannuation Industry (Supervision) Act 1993.
“Some of these matters were referred to APRA by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in February 2019, and others were self-reported by AMP Super between late 2019 and 2020,” APRA said.
“The Australian Securities and Investments Commission (ASIC) has been conducting its own investigations into AMP Super, and APRA and ASIC have engaged with each other on their respective investigations and have agreed that the entering into of this CEU will address regulatory concerns both agencies have had with AMP Super.”
APRA said recognised AMP Super’s improvements, but believed it had to be further embedded and operationalised, which meant AMP Super would commit to:
- Identify and address the root causes of the potential breaches and issues with input from an independent expert;
- Rectify areas of concern;
- Remediate members who have been affected by aspects of the conduct dealt with by the CEU (noting that AMP Super had already remediated members in some cases); and
- Continue to enhance its governance controls, risk management and processes for acting in members’ best interests.
Margaret Cole, APRA member for superannuation, said APRA accepted the CEU as the “most effective and efficient way to protect AMP Super members by ensuring there was minimal risk of such issues recurring”.
“AMP is one of the wealth industry’s largest and best resourced companies, and APRA expects a commensurately high standard of governance and risk management,” Cole said.
“While we acknowledge the efforts AMP Super has made towards improving its internal systems, the issues addressed by the CEU show there is further work to do.
“By offering this CEU, AMP Super has committed to fix promptly remaining legacy issues that have existed within its superannuation business and ensure affected members are appropriately remediated."
Alexis George, AMP chief executive, said the firm had changed substantially over the past few years and was focussed on operating to the highest standards.
“While these matters are historical and AMP has either completed remediation or is in the process of remediating, we continue to transform our superannuation business to prevent recurrence and ensure we’re delivering on our promises to customers,” George said.
“There have been times in the past that we have not got this right and for this we apologise. We support our trustee in offering this [CEU] to APRA to address the regulator’s concerns on these historical matters.
“We are making strong progress in rebuilding AMP for our customers, people and the community, including through the actions we’ve taken to address these matters and our continued simplification. We still have work to do but are very committed to making further changes to deliver on our commitments.
“APRA has acknowledged the work AMP’s superannuation trustees have undertaken so far to improve governance, systems, controls and processes. We will continue to engage constructively with APRA and the requirements of the undertaking to expedite these matters to a conclusion.”