AMP’s glittering death spiral

AMP doesn’t just have a women problem. It has an everyone problem

It is breath-taking to behold. One of Australia’s oldest and (formerly) most venerated firms, AMP. As it twists and folds through successive graceless turns of its glittering death spiral. From an historical high of $45 per share, to the pitiful $1.50 today, I give the company five years before it is consigned to the scrap-heap of history. Here’s why…

Where to begin…? Revelations at the Hayne Royal Commission that AMP was charging fees for no service (some would call that ‘fraud’), to charging dead customers for financial advice (some would call robbing a corpse particularly distasteful). One can only wonder how such a service would be provided exactly? By séance perhaps? Then the revelations that the company lied – in writing – to the regulator, ASIC, so many times that they lost count (again the irony is withering. Counting is something most people would regard as a key skill for a financial services firm). Then there were the revelations that in an ‘independent’ investigation, commissioned by AMP, and conducted by AMP’s lawyers, and subsequently submitted to ASIC, the Chair and CEO directed so many changes and amendments to the Report that it was almost ghost-written. Next came the PR spin, with all the grace and finesse of a road accident: AMP asserted that when they said the report sent to ASIC was ‘independent’ they meant it was ‘independent of ASIC’ not ‘independent of AMP’. Across the length and breadth of Australia you could hear eyes rolling. I said at the time the life-span of that ploy (the description seems so unfair to ploys) would be measured in days. Sure enough, about 36 hours later the Chair and CEO walked the plank. But not before the Chair complained that the media were camped outside her house and frightening her children, when she tried to take them to school (but think of the children…), until one journalist pointed out, her kids were on school-holidays. 

Shame on the writers of the Bold and the Beautiful. You call yourselves soap-opera writers? Talentless swill. Come to Australia, we’ll show you how to write melodrama.

Thereafter someone-somewhere thought it would be grand to appoint David Murray as the new Chair. Here I make full disclosure. I have for some time now not renewed my membership of the David-Murray-for-Christ Club. Call me picky but I just think there are examples from the late Mesozoic period that are slightly more woke. Murray got cracking on appointing a flashy fly-boy by the aptly named Franco de Ferrari as CEO. But not before The Ferrari negotiated an eye-watering $7 million sign-on bonus. Just to be clear: he wanted seven bar before he set foot in his office. Because… some sort of genius savant. Apparently. At this point one starts to lose sympathy for AMP shareholders: there’s unfortunate, and then there’s just punishment gluttony. But at least, one might expect, The Ferrari would be laser-focused on doing what was needed. That’s a list to which I will return.

Instead he set about trying to sell AMP’s New Zealand life division to Resolution. That sale was blocked by the NZ authorities because it failed to adhere to an agreement that NZ policy-holders be given adequate protection in the event of a sale. The Kiwis had a written agreement-and-everything (funny thing that. Kiwis. Frustratingly efficient and on the ball compared to their lumbering cousins to the west). One would assume at this point that (a) because AMP is 170 years old, and (b) started life as an NZ company that (c) the written-agreement-and-everything must be terribly old. How else would a sharp fellow with a speedy surname on a 7 extra, EXTRA large sign-on bonus miss something so critical? What with being a savant and all. Well the agreement wasn’t new, to be fair. It dated all the way back to 2018. David Murray (him of the for-Christ fan base) tried to blame the New Zealanders. The RBNZ quickly put him back in his box.

But all of that is just the Hors d’oeuvres. While the Hayne Commission was slaying dragons (or stomping on cockroaches – it depends on your perspective), the highly respected and rigorously independent Productivity Commission released its findings into Australia’s Superannuation industry. In it they named the 50 worst performing funds in the country (all of which are retail funds). And which firm was front and centre? 


(Did you guess it? If you did you too may be a savant).

At this point AMP started haemorrhaging customers like a decapitated victim in a slasher-flick. It was gory to say the least. And herein lies the first lesson: trust. T.R.U.S.T. It’s a bit of a thing when you are handling other people’s money. It’s a bit more of a thing when you are handling people’s retirement savings. And it’s a funny thing, trust. It can take 170 years to build and just one tawdry afternoon of sweaty-testimony to irreparably shatter. Lying as a norm, stealing from the dead. This didn’t just burn bridges between AMP and the people who keep them in business. It was saturation bridge-bombing, followed by napalming most of the surrounding country-side. A powerful lesson, no?


As situationally aware as a recalcitrant garden-gnome, and ignoring The Immutable Truth: that they are a business whose currency of trade is trust, what did they do? They did it again. And again. And again. These. People. Just. Don’t. Learn. Ten months after the Hayne Commission handed down its Final Report, ASIC revealed in Parliamentary Committee questioning that AMP was still charging dead people for financial advice.And that’s not all (it never is). In their remediation programme they were ‘refunding’ customers by putting the refunds into new Super accounts. A neat trick. Every new account doubles up on fees they can charge. So what the right hand gives, the left hand takes away. Then the right hand takes away some more. And here I refer to the customers lucky enough to get refunds under a scheme that has been pilloried for acting at a pace much like – well – a Ferrari that’s broken-down in the shade of Italian automotive reliability. 

But wait, there’s more. 

To try and cleave back money, money, money (never mind trying to restore trust, trust, trust) AMP has foreclosed on most of its tied-brokers: they’ve been forced to sell their practices back to AMP at a fraction of the price they paid. Because of course shafting the people who sell your dreck is a scheme only a savant riding on the back of a Brontosaurus could cook-up.

All of this is what youths-in-hoodies call woke.


Against this backdrop there has been an awareness created nationally, and internationally, of the despicable and vile sleaze that too many women in every facet of life have to weather, every day. The #MeToo Movement, sparked in the US after revelations of institutionalised creepiness to flat-out rape by the human toad Harvey Weinsten, has washed its oily slick onto our shores. At the High Court no less. What a day of shame for Australia. You would think that a seven-million-dollar-before-I-start-work man like The Ferrari, and his Brontosaurus, would have that in mind when promoting – let alone failing to sack – a senior executive? But like a youth wearing his hoodie, but back to front, they nonetheless put money, money, money ahead of trust, and appointed a sexual harasser to lead their most profitable arm, AMP Capital.

You couldn’t make this stuff up.

Where this dates back to is the de-mutualisation of AMP. For those who may not be aware of what that means, allow me to explain: A ‘mutual’ is a corporation owned by the ‘members’. Members are the people who have policies with the firm. It is by far and away the best model, because all the profits go to the owners who are also the policy-holders. When a mutual de-mutualises, it converts itself to a listed company comprised of shares, and shareholders. The policy-holders get a proportion of the shares – but just a proportion – a share of the shares if you will. The remainder – millions of shares usually, are sold to investors. In that way the mutual raises capital from the market. They tell the former owners that the injection of capital will allow them to expand and make more profit. But what they neglect to mention is that the company – which they used to own – will now have two masters: the policy-holders and the shareholders. Very quickly, the shareholders become the paramount master. They will sell (or buy) the shares based upon short-term gains – a quarter of a year usually. Whereas the policy-holders will only see their returns decades-hence.

So, the pressure is on. Profit, profit, profit, now, now, now. And to super-charge that toxic spiral, the directors get bonuses based upon the profitability (over a quarter and a year) and the share price (which is also based upon profitability over the quarter and the year). So it’s not just toxic. It’s leveraged toxicity.

To make targets, the company has to find new ways to bring in the bucks. In an ideal world this would come from hard work, and the best investment decisions. Coupled with that, new policy-holders would join up because… hard work, great investing. 

In an ideal world.

In the AMP world, hard work and great investing wasn’t producing results fast enough – and they never do by the way. Because… stellar performance this quarter, and the targets will get even higher next quarter. This is the insatiable beast called greed. And when there are no checks and balances, where will the monster look to feed? On the policy-holders.

So, fees and charges go up (and up and up). And when those cannot go up fast enough, new fees and charges are introduced. There’s a theory of taxation which applies here: if you levy one giant tax on the populace, they’ll burn down the government. So instead, you split the one massive tax into thousands of little taxes, which can be increased incrementally, and added to surreptitiously. So AMP did that.

But still the beast wanted more. And by this stage hard work and great investing had been forgotten. The place had become a gouge-fest. Where to find more revenue? Steal it.

Charge customers for financial advice they hadn’t received – indeed couldn’t receive because there weren’t enough financial advisors to go around. Still the beast wanted more. And by now ‘ethics’ and ‘integrity’ would be code for ‘trouble-maker’. So, anyone with any of those traits would’ve been ‘managed out’. That way charging financial advice could be extended to customers who were… you guessed it… dead.

This is typical of a company that has lost its way, forgotten its purpose, and whose culture has become fetid, toxic sludge.

When this was revealed before the Royal Commission, along with all the other nasties that infect a poisoned culture, like lying to the regulators, AMP went into free-fall. Now if you are a savant you might add up one plus one and come to the result that the solution is de-toxify the culture, and stop shafting your policy-holders, right? Well, if you agree with that, then clearly that’s because you are not really a savant (no $7 million sign on bonus for you). Instead The Ferrari on his dinosaur added one plus one and come out at 3 (entirely correct for extremely large values of one). They doubled-down on charging fees for no service. As late as December 2019 – ten months after the end of the Hayne Commission, ASIC was still railing at AMP for this dishonesty. But the reason is easy to understand: if you don’t know how to make money through hard, honest work and great investing… well for pity’s sake be reasonable… They had to make money somewhere. How else would they pay The Ferrari his 7 bar sign-on bonus?

It’s the same toxicity that has resulted in revelations this week from the victim of the harassment directed at her by Boe Pahari, the newly installed head of AMP Capital. In attempting to side-step that deplorability AMP cooked-up excuses which Pahari’s victim has rejected as untrue, half-truths, efforts to diminish and belittle the conduct in question, efforts to sanitise it all, etc. And oh boy, she’s got copious file-notes and a gun of a lawyer at Maurice Blackburn. The formidable Josh Bernstein. And as if that were not enough, she’s hired the same firm of New York lawyers who represented Gretchen Carlsson when she eviscerated the world’s second most powerful man in media: Roger Ailes – CEO of Fox News. Looks like this sub-plot will continue to move ink by the truck-load (stories in the SMH, The Age and the AFR today). That’s on top of Pahari allegedly spewing homophobic slurs (I always find prejudice to be an exquisite irony when it comes from a man of colour). And of course I neglect to mention the exit of another senior executive, Alex Wade, head of AMP Australia: sacked last week because he was texting lewd self-portraits to his female employees. But I must not digress into that saga, because of course with AMP you can’t talk about everything in one go. It’s a blog post, not a PhD, after all.

At this point you want to get the popcorn, and pull up a chair. 

But why did AMP circle the wagons round Pahari, in the midst of an existential crisis, I hear you ask? Well as one board member, John Fraser explained, Pahari has made AMP a lot of money.

There we go again: money, money, money.

Funny that. The Ferrari also explained this week that the 50% collapse in AMP’s profits are due to ‘reputational issues’. Wait. So… in fact these geniuses can’t even chase money effectively.

In the last fortnight Mr Speedy said he now realises culture is the most important issue at AMP. Now. He nowrealises. Somehow, despite being CEO for two years, and being so smart they had to pay him what a small country town would earn in a life-time to grace the place with his genius, and after scandals that have put the firm on a trajectory that will double up as a case study for aeronautical engineers (how flying things crash), he now realises the place has a culture problem.

You have to laugh. Else you’d cry.

In the interim AMP has gone from about eight women in leadership roles to (at last count): one. But its early days and only Monday. Could go lower, you never know.

So now we come to that list I mentioned at the start of what seems like a long piece, but is really nothing more than a nodding acquaintance to all the scheisse that has become this raging, Earth-dwarfing, Jupiterian-sized Giant Red Spot of a shit-storm that is the vortex formerly known as Australian Mutual Proprietors.

Cummings and Worley (Cummings, T.G. and Worley, C.G. (2001), Organizational Development and Change, 7th ed., South-Western College Publishing, Cincinnati, OH.) provides a six-step model by which leadership should lead:

  1. Formulate a clear strategic vision;
  2. Display top-management commitment;
  3. Model culture change at the highest level;
  4. Modify the organisation to support organisational change;
  5. Select and socialise newcomers and terminate deviants; and
  6. Develop ethical and legal sensitivity.

Newton (Newton, A. (1998), Compliance: Making Ethics Work in Financial Services, Financial Times Management, London, p. 98) states thusly:

The values, attitudes and beliefs exhibited by senior management represent the single greatest influence on the culture of the organisation. They must drive the development of the right culture. If senior management do not appear consistently to be committed to the need for or implementation of the right culture that will send a clear message to all employees that they have no incentive for doing so either.

None of these traits have been practiced by the leadership of AMP. Unfortunately, the rubric of ‘stability’ will prevent the changes that need to be made, assuming that there is still time to make them. For one thing, AMP needs a leader that is humble, introspective, will listen, will learn, and when need be, unlearn. Someone willing to ‘serve’ – principally policy-holders. That kind of person is not possessed of an ego so enormous that his ego has an ego. The sort person who demands seven million dollars before he has demonstrated he can, he cares, he ‘gets it’. Someone who will not appoint sexual harassers to the highest echelons of a company that serves a country in which women are in the majority. Nor does it envisage a Chair who once said that trying to regulate culture was comparable to the Nazis. Because being held accountable is like being in Auschwitz, apparently. What a galling cheek. [Murray did walk those remarks back after an explosion of anger and disgust].

So, AMP will not be saved. You can take that to the bank. 

It won’t even make for great viewing. It’s too pitiful and sad for that.

Post Script: Revealed tonight: Boe Pahari, sexual harasser and head of AMP Capital has just appointed himself as head of the inclusion and diversity committee. This saga has gone from tragedy, to high farce. I would say ‘you couldn’t make this stuff up’ but I’ve used that already. Kudos though to AMP. They’ve left me out of words…