AMP’s new boss Francesco De Ferrari says royal commission drives ‘impetus for change’
AMP’s new chief executive Francesco De Ferrari has conceded that serious mistakes were made at the embattled wealth manager, but said the flashpoint of the “fees-for-no-service” scandal pointed to systemic issues across the entire financial services sector.
- Francesco De Ferrari took over as AMP’s CEO on December 1, replacing acting CEO Mike Wilkins
- AMP is facing a customer compensation bill in the high hundreds of millions of dollars for fees-for-no-service
- Mr De Ferrari plans to push ahead with AMP’s planned $3.3b life insurance sale
Mr De Ferrari began what must be one of Australia’s most challenging corporate roles earlier this week, as AMP braces for the final report from the financial services royal commission after the revelations about misconduct trashed the company’s reputation and shredded its market value.
Speaking to the ABC’s AM program, the former Credit Suisse banker said he was taking a “glass half-full” attitude as he confronted the AMP crisis, while making no excuses for practices that senior counsel assisting Rowena Orr QC linked to potential criminal breaches of the Corporations Act.
“Clearly we have learned a lot of very hard lessons this year,” Mr De Ferrari said in his first broadcast interview since joining AMP.
“We need to take the corrective action to restore the trust in all the various stakeholders.
“Organisations are comprised of human beings. Human beings make mistakes.
“I don’t think I’ve seen an organisation that hasn’t made mistakes. The question is how quickly the organisation realises the mistakes and fixes them.”
While making no excuses for alleged misconduct at AMP, Mr De Ferrari said the royal commission had highlighted issues across financial services and not just at the wealth manager.
“Clearly these are widespread systemic issues. I think the financial industry needs to be realistic about these issues and address them appropriately,” Mr De Ferrari told AM.
“I think the royal commission offers the financial industry the opportunity to ask some of the tough questions and drive an impetus for change which otherwise would have not been there.”
Mr De Ferrari replaces Craig Meller, who was sacked earlier this year at the height of the “fees-for-no-service” revelations.
Other AMP casualties include chairman Catherine Brenner, chief legal counsel Brian Salter and three members of the AMP board.
Mr De Ferrari, who has relocated with his wife and family from a lucrative banking role in Singapore, would not be drawn on a timeline for restoring community and investor trust in AMP.
“I want to meet as many customers, employees, agents. Obviously I need to meet the regulator and so I want to get input on what they feel is right and wrong and where they would see the company heading,” he said.
“I think once we’ve done that, then we can put a more concrete timeframe around its implementation.”
De Ferrari not planning to reverse life insurance sale
In the lead-up to his official start at AMP, acting chief executive Mike Wilkins announced the controversial $3.3 billion sale of the company’s life insurance arm, which has unsettled some key institutional investors.
But Mr De Ferrari backed the proposed sale as being in the best long-term interests of AMP shareholders.
“From a strategic point of view, the Resolution deal absolutely makes sense,” he argued.
“You need global scale to compete in the underwriting of insurance and not a single country focused monoline of insurance simply cannot compete with a lower cost of capital of the global players,” Mr De Ferrari said.
“It would have been a business which would have continued to underperform and that is not in the best interests of shareholders.”
Quizzed on why he left Credit Suisse after 17 years to take on the AMP crisis, Mr De Ferrari told the ABC that he “really likes challenges” and that the sense of purpose and respect previously held for AMP had “really resonated with me”.
“I generally tend to like see the glass half-full, so AMP has a fantastic brand and has really great employees,” Mr De Ferrari said.
“The one thing that became more evident to me was the level to which AMP is embedded in the fabric of Australian society and a broad-based support for AMP’s turnaround to succeed.”
Mr De Ferrari has committed to staying with AMP until the company’s turnaround is complete but said it was premature to predict his strategy for dealing with issues that have emerged from the royal commission.
Kenneth Hayne’s final report is due to be handed to the Governor-General on February 1 and is likely to contain civil or criminal referrals to the Commonwealth Director of Public Prosecutions.