![The AMP inquisition moved on to the way it runs its wealth platforms. Not surprisingly, there's a handy fee grab there too.](http://web.archive.org./web/20180418082838im_/http://www.afr.com/content/dam/images/g/x/t/1/2/8/image.related.afrArticleLead.620x350.h0ywv6.png/1524034303926.png)
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Another day, another hammering for AMP at the Hayne royal commission.
With wealth boss Jack Regan presumably in a dark room recovering from his brutal questioning at the hands of counsel assisting Michael Hodge, the commission moved onto AMP's platforms business, run by John Keating.
Wealth platforms are designed to provide customers with an easy way of accessing a range of different products (particularly managed funds) in one spot.
But there is a price for this convenience.
![According to AMP's John Keating, the financial adviser that sold you into the wrap can take an advice fee. In the case ...](http://web.archive.org./web/20180418082838im_/http://www.afr.com/content/dam/images/h/0/y/w/s/d/image.imgtype.afrArticleInline.620x0.png/1524010846771.jpg)
Platform operators such as AMP operate an "approved list" of products that investors are restricted to – managed funds and insurance for example. Often the product manufacturers have paid to be on these lists. Often the lists include in-house products; that is, products manufactured by AMP.
The customer then pays a series of fees. There's an administration fee of around 2.51 per cent in the case of most AMP customers.
In addition, according to Keating, the financial adviser that sold you into the wrap can take an advice fee. In the case of a client with $250,000 in one AMP wrap, that fee would be $5250.
For your convenience, the platform deducts these fees directly from the customer's cash balance. Oh, and if you don't have the cash to cover the fees, the platform automatically sells the products contained within to cover the fees.
Hayne and Hodge found a few problems with these arrangements.
The first was that while it is possible to move from one AMP platform to another AMP platform without the need to sell out of an individual fund (and trigger a tax event), there are occasions where a customer wanting to move to a platform outside AMP will have their product sold for them.
"You [AMP] can call for the asset being held on trust for you," Hayne confirmed. "An unusual definition of trust, I would have thought."
Hodge also probed Keating on whether AMP had changed its automatic-fee mechanism to reflect a change in the law in 2013, whereby customers had to specifically opt in to allow an adviser to charge an advice fee.
Keating said AMP had not. That is, the AMP platform machine may still be taking advice fees out of customer accounts when they hadn't formally opted in to pay this fee.
Hodge asked Keating whether he was comfortable with this.
Keating said he wasn't uncomfortable; the discussion about the advice fee was one between the adviser and the customer and AMP's platform was merely a collection mechanism.
Hayne seized on this as an "an interesting characterisation".
"You're disposing of the individual customer's assets when you pay the fee," he asked Keating. "You do that without any assurance to the platform operator that the disposition is permitted."
Keating replied: "Yes, that's correct."
Hayne's interjection here is an important reminder of the way AMP seems to have forgotten whose money they are actually looking after here – and it's not theirs.
The AMP executive said there was no technological barrier to simply stopping the deduction of the advice fee every two years while it checked the customer's opt-in was updated. It would be considered in the future development of the wrap platforms, he said.
But the fact this change hasn't been made in the five years since the law changed simply drives home what is rapidly emerging as the AMP approach to fees – take 'em now, and worry about compliance later.
And after the last two days, it's getting very hard to think that's not baked into its once-storied culture.
Review rip-off
The afternoon session at the commission hearings saw the executive general manager of Commonwealth Bank's private bank, Marianne Perkovic, forced to explain why CBA felt it was able to charge customers for an annual review even if the client didn't actually get that review. She said CBA had taken the fact a review was offered  as enough to trigger the charge.
These reviews are supposed to be the bedrock of our financial planning regime, ensuring that clients are getting advice suited to their changing needs. Instead they appear to have been adopted as chance to clip the ticket with the minimum of work.Â
James Thomson
j.thomson@fairfaxmedia.com.au