The Australian Prudential Regulation Authority (APRA) has agreed to accept a court enforceable undertaking (CEU) from AMP Superannuation and NM Superannuation Proprietary (AMP Super) pledging to rectify governance and risk management deficiencies.
AMP Super controls two superannuation funds with estimated net assets of A$116bn (£63bn, $85bn, €75bn) and sits within the AMP Group.
This deal follows an investigation into past conduct that APRA believes “led to a number of potential breaches by AMP Super of the Superannuation Industry (Supervision) Act 1993”.
These issues were referred to APRA by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in February 2019, and others were self-reported by AMP Super between late 2019 and 2020.
The Australian Securities and Investments Commission (ASIC) has been conducting its own investigations into AMP Super, and APRA and ASIC have engaged with each other on their respective investigations and have agreed that the entering into of this CEU “will address regulatory concerns both agencies have had with AMP Super”.
APRA had already imposed additional licence conditions and directions on AMP Super in June 2019 in response to concerns about its governance and risk management frameworks. Although AMP Super had made improvements to its internal systems, controls and processes, the CEU covers specific matters additional to those addressed by APRA’s 2019 enforcement action.
The regulator said that it “recognises AMP Super’s improvements”, but “believes these must be further embedded and operationalised”. AMP Super said that it has acknowledged APRA’s concerns, and “accepted that rectification and remediation of members as outlined in the CEU are appropriate”.
Under the terms of the CEU, AMP Super has committed to:
- identify and address the root causes of the potential breaches and issues with input from an independent expert;
- rectify areas of concern;
- remediate members who have been affected by aspects of the conduct dealt with by the CEU; and
- continue to enhance its governance controls, risk management and processes for acting in members’ best interests.
AMP has addressed and completed remediation for several of the matters. One further matter is currently in the process of being remediated and AMP has agreed to revisit its remediation approach in relation to another matter.
The Australian bank said that it “will ensure affected members will be appropriately compensated” and expects that its rectification and remediation cost relating to the CEU will be in the range of A$40m-45m.
Margaret Cole, APRA member, said: “AMP is one of the wealth industry’s largest and best resourced companies, and APRA expects a commensurately high standard of governance and risk management.
“While we acknowledge the efforts AMP Super has made towards improving its internal systems, the issues addressed by the CEU show there is further work to do. By offering this CEU, AMP Super has committed to fix promptly remaining legacy issues that have existed within its superannuation business and ensure affected members are appropriately remediated.”
Alexis George, AMP chief executive, said: “AMP has changed substantially over the past few years and is focussed on operating to the highest standards, as rightly expected by our customers.
“While these matters are historical and AMP has either completed remediation or is in the process of remediating, we continue to transform our superannuation business to prevent recurrence and ensure we’re delivering on our promises to customers.
“There have been times in the past that we have not got this right and for this we apologise. We support our trustee in offering this CEU to APRA to address the regulator’s concerns on these historical matters.
“We are making strong progress in rebuilding AMP for our customers, people and the community, including through the actions we’ve taken to address these matters and our continued simplification. We still have work to do but are very committed to making further changes to deliver on our commitments.
“APRA has acknowledged the work AMP’s superannuation trustees have undertaken so far to improve governance, systems, controls and processes. We will continue to engage constructively with APRA and the requirements of the undertaking to expedite these matters to a conclusion.”