Shares in troubled financial advice and asset management business AMP Limited (ASX: AMP) hit a new 52-week low this morning after the group flagged a $290 million cost for "potential advice remediation" to make good the problems across its financial advice business.
It's the fallout from the Royal Commission's insights into some of the dodgy financial advice practices at AMP that has induced the provision as AMP reports it is now required by ASIC to take part in an 'industry wide' look back of "advice provided from 1 July 2008 and 1 January 2009, respectively".
AMP will also take another $55 million in post tax one off costs over the first half it reports – the costs are related to inter alia, the Royal Commission and other remediation or review policies.
Aside from the $345 million in provisions, AMP now expects to report an underlying profit between $490 million to $500 million for the six-month period ending June 2018. The group's 'wealth protection' or life insurance style business is also continuining to struggle, with it expecting to report "negligible operating earnings" over the period as a result of "negative experience and capitalised losses".
Selling insurance products that sit under the 'life' and 'general' insurance umbrella has been a tough business for a long time in Australia as consumers demand more and become more likely to let policies lapse that they don't feel provide value.
