SYDNEY, Nov 28 (Reuters) - Australia’s AMP Ltd said on Wednesday compensation for customers who had received bad advice or been wrongly charged would total A$778 million ($562.3 million), as jitters about the size of the bill drove its shares down almost 6 percent.
Shares in the country’s largest-listed wealth manager fell in morning trade after AMP interim Chief Executive Michael Wilkings told a public inquiry on Tuesday the firm had expected to spend A$1.19 billion to compensate customers.
That was much larger than the A$290 million the firm had previously said it had put aside for refunds. Wilkings also said an internal review could uncover further cases of bad advice and wrongful charging.
AMP shares fell 5.76 percent to A$2.29 in early trading on Wednesday, while the broader market was 0.23 percent lower.
In a bid to clarify the situation, the company issued a statement to the stock exchange on Wednesday explaining that the A$1.19 billion estimate was based on a nine-year plan to refund thousands of customers. The plan had been changed to shorten the time-frame, hence the latest figure of A$778 million, it added.
The firm has been rocked by revelations of widespread misconduct including charging customers without providing a service and conspiring at board level to deceive regulators about the practice.
Wilkins faced the powerful Royal Commission inquiry into financial-sector misconduct for a second consecutive day on Wednesday.
The government-ordered quasi-judicial inquiry has shaken public trust in some of Australia’s wealthiest financial firms since it began exposing rampant greed, rule-breaking and poor governance at its public hearings since February.
Wilkins was followed in the witness stand by Shayne Elliott, the chief executive of Australia’s third-largest lender, Australia and New Zealand Banking Group.
The inquiry is grilling the CEOs of major firms in its closing hearings, ahead of a final report due in February which is likely to recommend tougher regulation and stricter penalties for white-collar crimes.
$1 = 1.3837 Australian dollars Reporting by Paulina Duran; Editing by Stephen Coates