SYDNEY (Reuters) – Australia’s banking watchdog on Friday said it had imposed stricter licensing conditions on AMP Ltd’s pension fund units following concerns regarding its compliance with superannuation laws, sending its shares down more than 4%.
FILE PHOTO: The logo of Australia’s biggest wealth manager, AMP Ltd, adorns their head office building in Sydney, Australia, Feb. 9, 2017. REUTERS/David Gray/File Photo
The move comes as the country’s largest listed wealth manager works to rebuild its brand after revelations of serious wrongdoing at an inquiry into the financial sector last year, including the charging of fees for services not rendered.
Responding to the Australian Prudential Regulation Authority (APRA), the 170-year-old company said it would “fully implement” the additional requirements dictated by the regulator at pension fund units AMP Superannuation Limited and N.M. Superannuation Proprietary Limited, collectively known as AMP Super.
Neither APRA nor AMP disclosed details of the conditions.
“We have been working constructively with APRA on this matter and have already taken action on a number of the issues raised,” AMP said in a statement.
Areas APRA said required attention included conflicts of interest, governance, risk management practices, remediation processes and accountability mechanisms.
Since the Royal Commission drew revelations of misconduct, Australia’s oldest wealth manager has struggled to sell its products and instead has seen clients pull out billions of dollars worth of assets.
The firm is due to report its latest cash flow statement and strategy update on Aug. 8.
AMP is also facing a class-action lawsuit filed on behalf of pension fund account holders claiming overcharging of fees.
Sean Sequeira, chief investment officer at Alleron Investment Management, said he expected AMP would be able to comply with any new conditions, but the regulator’s move would make it even harder for the company to win clients.
“In regards to finding, keeping and managing all of their clients and even one day grow their client base, it makes their job harder when the regulator comes out and says they will be imposing further conditions on them,” he said.
Shares of AMP were trading down 4.4% at $2.14, while the broader market was 0.1% lower.
Reporting by Wayne Cole and Paulina Duran in Sydney; Additional reporting by Aby Jose Koilparambil in Bengaluru; editing by Grant McCool and Christopher Cushing