AMP Limited’s [ASX:AMP] share price fell a further 3.16% this morning, after revealing a downgrade in first-half profit for 2018 and dividend expectations.
Shares of AMP are currently trading at $3.37, down 38.61% from the company’s 52-week high.
AMP’s warning to investors
AMP revealed in an update this morning that it is expecting a loss of between $33–44 million in underlying first-half profit for 2018. This is a result of AMP’s remediation program to compensate customers who have received poor advice by the firm in the past 10 years.
The firm also warned investors that their interim dividend payment may be lower than expected.
It’s no secret that AMP have been experiencing tough trading conditions particularly in the past six months, although this morning they revealed their plan to ‘reset the business’.
What steps are AMP taking to ‘reset the business’?
The troubled wealth management firm announced this morning its plan to restructure and strengthen the business, which will see AMP prioritising customers and strengthening risk management systems and controls.
AMP will set aside $290 million for potential advice remediation, meaning the company will review whether the financial advice provided over the past decade was appropriate.
In addition, AMP will invest approximately $70 million over the next two years to significantly enhance risk management controls and strengthen compliance systems across the business.
The company also announced fee reductions to its MySuper product, which is expected to reduce fees for around 700,000 existing customers and enhance the competitiveness of AMP’s superannuation offerings.
AMP CEO Mike Wilkins said that customers’ needs are the immediate priority for the company…
‘Today’s announcement reflects our commitment to take decisive action to reset AMP and establish a platform from which the business can recover rapidly. We’re facing squarely into the issues that have impacted our reputation and the community’s confidence in AMP.’
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