AMP AMP Limited

   By Robb M. Stewart 
 

MELBOURNE, Australia--AMP Ltd.'s (AMP.AU) outgoing chief executive will step down immediately, after revelations Australia's biggest wealth manager misled customers and the corporate regulator over fees charged for services that weren't delivered.

In a regulatory statement Friday, AMP said CEO Craig Meller would be replaced on an acting basis by Mike Wilkins, a non executive director and a former CEO of Insurance Australia Group Ltd. (IAG.AU).

It comes as a Royal Commission inquiry into cases of misconduct in the financial industry, initiated by the government, heard evidence this week that AMP allegedly lied to the Australian Securities and Investments Commission for years to cover a practice of charging customers for services they didn't receive. AMP issued an apology Friday over the misconduct and its regulatory disclosure.

Mr. Meller said he was "personally devastated" by the actions revealed in the inquiry.

"I do not condone them or the misleading statements made to ASIC. However, as they occurred during my tenure as CEO, I believe that stepping down as CEO is an appropriate measure to begin the work that needs to be done to restore public and regulatory trust in AMP," he said.

He had planned to retire by the end of the year.

Prime Minister Malcolm Turnbull's conservative government last year launched a sweeping probe of the country's banks, insurers and other financial-services providers over allegations of misdeeds including giving misleading advice, not honoring insurance claims, rigging rates and failing to prevent money laundering.

On Wednesday, Treasurer Scott Morrison said the admissions made by AMP to the inquiry were "deeply disturbing" and that such behavior could attract penalties including jail time. The government on Friday said it was stiffening the penalties available to regulators for individuals and financial-services firms.

AMP said Friday it would begin an immediate review of its regulatory reporting and governance processes, and make a submission to the inquiry responding to issues that had been raised.

As early as 2009, AMP told the regulator that there had been instances where it had mistakenly charged fees after customers stopped receiving advice. Evidence presented by the inquiry suggested the practice had been discussed by management and approved. The inquiry heard that senior officers at AMP had requested changes be made to a report it commissioned a law firm to produce for the regulator on the matter of fees.

Questioned this week by a lawyer for the probe, AMP's head of advice Anthony Regan conceded that AMP's failings were in some cases a deliberate decision by the company rather than a failure in process.

ASIC this week said it has been investigating AMP's conduct in relation to "fees for no services" raised in the inquiry.

Mr. Meller, who began his career with Lloyds Banking Group PLC in the U.K., was appointed CEO of AMP in January 2014. He joined AMP's U.K. business in 2001 before coming to Australia the following year.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

April 19, 2018 20:22 ET (00:22 GMT)

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