The AMP Limited (ASX: AMP) share price bounced 11% higher today after the final banking Royal Commission report was handed to the public yesterday.
AMP is a diversified financial services company with operations in financial planning and wealth management. A big part of its business is licensing other planning groups to provide advice. AMP also has capabilities in investing (AMP Capital), banking and insurance.
Why The AMP Share Price Is Going Nuts
In the final report from the scathing banking and financial services Royal Commission, the big banks like AMP and Australia and New Zealand Banking Group (ASX: ANZ) were supposed to get hit with increased regulation and forced divestments that would foster a new era of unconflicted financial advice and sales tactics.
That didn’t happen.
And AMP shareholders are loving it…
While ASIC announced it is banning Commonwealth Bank (ASX: CBA) from receiving ongoing fees from financial advice clients, we covered what the story means to CBA here, AMP and the other major banks would have had a deep sigh of relief yesterday when Commissioner Kenneth Hayne handed down his recommendations.
Why Are AMP Investors So Happy?
From today’s price reaction, AMP shareholders would have been especially pleased with the report.
For years, AMP has been a basket case of an investment and an unreliable provider of financial advice. However, since the public hearings of the Royal Commission things have changed, says AMP.
As we reported here, AMP Chairman David Murray recently said, “The fundamental business model at AMP is not structurally changed by the royal commission.”
Murray is alluding to the firing of senior staff, departures of key leaders and many personnel who are being held responsible for AMP’s terrible treatment of its clients, as revealed during the Royal Commission hearings and ASIC investigations.
Murray says there is still more work to be done with, “some important changes so that we can continue to have affordable, reliable and ethical advice.”
We covered the ins and outs of yesterday’s Royal Commission report in this article, “Your 30-second guide to the banking Royal Commission report”.
Are AMP Shares Ridiculously Cheap?
The Royal Commission turned into a flop for people hoping for positive change in the industry. For shareholders in the banks like AMP, it was probably the best they could have expected.
However, as Rask Media’s founder, Owen Raszkiewicz, wrote last month in his analysis called “2 Reasons I’ll Never Buy AMP Limited (AMP) Shares, AMP remains a company plagued by poor advice, ethics and governance.
He said, “…if a falling share price was all it could achieve when it was doing the wrong thing, I can only imagine it’ll be worse when it tries to do the right thing.” Keep reading the analysis here.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).