The chief executive officer of Australian finance company AMP Ltd yesterday suddenly resigned after revelations of widespread abuses by the firm, including charging thousands of customers for services they never received.
At the same time, the conservative government announced tougher criminal and civil punishments for corporate wrongdoing, with jail terms of up to 10 years for executives who cheat customers or lie to regulators.
Following several days of damaging testimony by AMP executives before a Royal Commission set up in February to investigate misconduct in the banking sector, AMP said that chief executive officer Craig Meller was stepping down “with immediate effect.”
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“AMP apologizes unreservedly for the misconduct and failures in regulatory disclosures in the advice business,” AMP chairman Catherine Brenner said in a statement
In addition to charging clients for non-existent services, AMP told the commission this week that senior executives had intervened in the drafting of a supposedly independent report drawn up for the inquiry.
It also said it mislead stock market watchdog Australian Securities and Investment Commission (ASIC) about the scandal, which affected about 15,700 clients between 2009 and 2016.
In its statement, AMP said a non-executive member of the firm’s board, Mike Wilkins, had been appointed acting chief executive officer and that an independent expert would head “an immediate, comprehensive review of AMP’s regulatory reporting and governance processes.”
AMP is just one of several major Australian financial services companies under scrutiny by the Royal Commission. Hearings this week also revealed that a subsidiary of the Commonwealth Bank of Australia, the country’s biggest bank, had continued charging service fees to some customers years after they had died.
Amid the ongoing revelations, the conservative government of Australian Prime Minister Malcolm Turnbull, which had long resisted launching the Royal Commission, yesterday unveiled plans to toughen criminal and financial penalties for bank misconduct and to expand ASIC’s investigative powers.
These include increasing the maximum jail term for individuals convicted of serious offenses from five to 10 years, and imposing fines on companies which could reach 10 percent of their annual revenue, Australian Minister for Revenue and Financial Services Kelly O’Dwyer said.
The country’s major banks — among the developed world’s wealthiest — have been under increasing scrutiny in recent years amid allegations of dodgy financial and life insurance advice, and mortgage fraud.
There have also been claims of laws against money laundering being breached and benchmark interest rates rigged.
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