Shares in financial services giant AMP Ltd (ASX: AMP) are up this afternoon, up 2.21% at $1.55. Meanwhile, the benchmark S&P/ASX 200 index (ASX: XJO) which is down 0.58%.
AMP released a statement after the close yesterday advising it has entered into an enforceable undertaking (EU) with the Australian Prudential Regulation Authority (APRA) in relation to a number of historical matters in its superannuation business.
The company notes that APRA has acknowledged that AMP has addressed and completed remediation for several of these matters.
This follows on from a lengthy saga that originated from AMP's involvement in questionable financial services practices that were exposed in the Financial Services Royal Commission.
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What else was announced?
AMP also advised that one matter is still being remediated and that it has "agreed to revisit its remediation approach" in relation to another.
It also confirmed all affected members will be appropriately compensated. AMP expects that its rectification and remediation costs will be in the range of $40 million to $45 million for settlement.
AMP also reckons that when this EU is finished, all outstanding matters referred to APRA by the Financial Services Royal Commission will be concluded. We are yet to hear what APRA has in reply to that statement.
In the Royal Commission, AMP was scolded for compliance issues and its poor financial advice practices. APRA imposed various conditions on the company from 2019 in response to the findings. However, a number of the issues in focus were self-reported as well.
AMP has since embarked on a series of changes to its branding and marketability, including executive changes and policy updates.
The release also notes that the company's trustees, AMP Superannuation Limited and N.M. Superannuation Limited, are committed to acting in the best financial interests of its members.
Speaking on the announcement, AMP's chief executive Alexis George 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.
George continued:
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 EU to APRA to address the regulator's concerns on these historical matters.
AMP share price snapshot
Despite holding the fort in early trading today, the AMP share price is down 33% in the last 12 months. It has also lost another 26% this year to date. Each of these returns is well behind the benchmark index's return of around 14% in the past year.
