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AMP chairwoman, legal counsel quit over scandal

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A photo taken in Melbourne shows a placard outside the Royal Commission set up in February to investigate misconduct in the banking sector. The judicial inquiry has found out that AMP has misled many customers and has deceived the corporate regulator.

Sydney

AUSTRALIA'S largest-listed wealth manager AMP announced the resignations of its chairwoman and legal counsel on Monday, and slashed its directors' fees by a quarter as it races to stem the fallout from damaging revelations of misconduct at the firm.

The exits follow disclosures at a judicial inquiry into the country's financial sector that AMP misled many customers and deceived the corporate regulator. The scandal has already caused the early departure of CEO Craig Meller, who was due to leave by year-end, and analysts expect more heads will roll. Chairwoman Catherine Brenner and group general counsel Brian Salter will depart immediately, AMP said in a statement.

Mike Wilkins, a former independent director who has been named both interim chairman and CEO, said that the evidence given to the government-backed Royal Commission is "being treated extremely seriously by the board". "Appropriate steps are being taken to address the issues raised, and remediating our customers is being given utmost priority," he said.

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AMP, which is also staring at a possible class action, has seen around A$2.2 billion (S$2.2 billion) wiped off its market capitalisation over the past two weeks in the wake of the revelations. It was valued at A$11.6 billion at last Friday's close.

The inquiry was told that advisers at AMP misappropriated funds of thousands of clients over the last decade by charging them without providing advice, and that it had repeatedly lied to the Australian Securities and Investments Commission (ASIC). Counsel assisting the inquiry said on Friday that AMP had breached provisions of the Corporations Act that carry criminal sanctions.

Ms Brenner, Mr Salter and Mr Meller were singled out by the inquiry as part of a group of senior executives that allegedly modified a report by law firm Clayton Utz and submitted it to the regulator in late 2017 as "external and independent".

Their intention was to limit the report's findings about the involvement of AMP's senior executives in misappropriating customer fees, the inquiry heard.

AMP said in its statement that Ms Brenner, Mr Meller and the other directors "did not act inappropriately in relation to the preparation of the Clayton Utz report". The statement did not comment on Mr Salter's behaviour.

The company said that it would make a formal submission in response to the allegations raised at the commission by May 4. The "employment and remuneration consequences" for individuals who were responsible for charging fraudulent fees will be determined once an external employment review is completed, which is expected shortly, it said.

AMP added that it would slash fees for board directors by 25 per cent for the rest of 2018 as a recognition of the "collective governance accountability for the issues raised in the Royal Commission and for their impact on the reputation of AMP".

AMP has already started searching for a new CEO, and will fast track the selection of a new chair to "help ensure stability and further strengthen governance", Mr Wilkins said.

David Ellis, an analyst at Morningstar, said that it was likely that more executives and board members would leave in coming weeks. "All bets are off," he said. "With a new CEO and a new board, the future strategy could be completely different."

AMP is currently staring at a possible shareholder class action, with litigation financier IMF Bentham Ltd saying that it plans to fund one against the wealth manager regarding alleged misconduct as revealed by the commission. BLOOMBERG