AMP is charging thousands of unsuspecting platform users for advice fees despite not receiving permission from the underlying customers as required by law.
It has also found a way around the banning of fees being charged for shelf space on platforms by charging fund managers annual fees under the guise of "comprehensive reporting" and a "fund managers administration fee".
AMP's reputation has taking a battering following allegations heard by the Hayne royal commission that the CEO, chairman and other executives interfered with a report that was presented to ASIC as independent.
Federal Treasurer Scott Morrison underscored the seriousness of the allegations on Tuesday when he said the offences could attract jail time.
Meanwhile, another can of worms was opened in Melbourne's Commonwealth Courts building on Wednesday when AMP's practise of charging customers on AMP's investment platforms for advice was examined. A platform holds investments such as managed funds and shares in one place and is also used by financial advisers for centralised reporting.
Following the introduction of the Future of Financial Advice reforms which banned most commissions, advice fees could only be charged to customers who had chosen to "opt-in" to the charge from 2013.
The royal commission however has heard that AMP had no way of checking whether AMP's financial advice customers had given the all clear to be charged the substantial fee which could be as much as 2.5Â per cent.
Counsel assisting Michael Hodges, QC, questioned AMP's head of platforms, John Patrick Keating, about the process for compliance with the opt-in rules at the financial services giant which services 3.8 million customers across Australia and New Zealand and appeared incredulous at the response.
"As the head of the platform team is a matter of concern to you that AMP is deducted fees for advice from the platform without confirming whether the legislation has been complied with?" Mr Hodge asked.
"I wouldn't say it is a concern but I would say it was a matter for the customer and the adviser," Mr Keating said.
Mr Hodge described AMP's investment platforms as a collection mechanism which were more suited to the collection of fees than the provision of investment services.
After it was established that customers may be charged despite not having given permission, Commissioner Hayne noted that in the circumstance where there was no cash held in the account that the customers assets would be sold to pay a fee.
Commissioner Hayne also noted that in some circumstances that assets being held by AMP could not be moved without triggering a tax event.
"You can't call for the asset being held on trust for you. An unusual definition of trust I would have thought," Commissioner Hayne remarked.
The morning session has seen considerable time spent on the nature of the platform business at AMP. Investors using AMP's platforms can only invest in AMP approved products which are overwhelmingly created by AMP.
It was also revealed that AMP charges fund managers a number of fees which are paid to a company called NMNT Limited, which is wholly owned by AMP for various platform services.
NMNT Limited charged fund managers $25,000 per fund per annum for a "comprehensive manager report" and another fee of between 10 basis points and 15 basis points as a "fund managers administration fee", which are permitted fees under the FOFA grand-fathering arrangements.
