Sydney (AFP) – The CEO of Australian finance company AMP resigned suddenly on Friday after revelations of widespread abuses by the firm, including charging thousands of customers for services 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 announced that CEO Craig Meller was stepping down “with immediate effect”.
“AMP apologises unreservedly for the misconduct and failures in regulatory disclosures in the advice business,” the company’s chairman, Catherine Brenner, said in a statement released early Friday.
In addition to charging clients for non-existent services, AMP admitted to the commission this week that senior executives had intervened in the drafting of a supposedly independent report drawn up for the inquiry.
It also admitted misleading the stock market watchdog Australian Securities and Investment Commission (ASIC) about the scandal, which affected some 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 CEO 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 (CBA), 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 Prime Minister Malcolm Turnbull, which had long resisted launching the Royal Commission, unveiled plans Friday to toughen criminal and financial penalties for bank misconduct and to expand ASIC’s investigative powers.
Financial Services Minister Kelly O’Dwyer said these include increasing the maximum jail term for individuals convicted of serious offences from five to 10 years, and imposing fines on companies which could reach 10 percent of their annual revenue.
The country’s major banks — among the developed world’s wealthiest — had 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 anti-money laundering laws being breached and benchmark interest rates rigged.