AMP’s [ASX:AMP] share price has fallen by over 3% this morning and is currently sitting at $3.13, at time of writing.
This marks a 15-year low for the financial services company, who’ve been struck with bad press after the Royal Commission uncovered dodgy practices.
This morning’s drop brings the share price lower than $3.52, AMP’s low point in the depths of the GFC.
Why did the price drop?
It’s likely that many have lost faith in the wealth management giant’s brand.
Since the Royal Commission has discovered poor lending practices within AMP, the company were required by ASIC to take part in an ‘industry wide’ review of ‘advice provided from 1 July 2008 and 1 January 2009, respectively.’
Back then, the company warned investors that interim dividends may be lower than expected. I suspect this will still be turning off the market.
To top it all off, Slater & Gordon Limited [ASX:SGH] targeted AMP in its Get Your Super Back campaign as one of the companies whose fund owes Australians big dollars.
Earlier this year, QE partner Damian Scattini called AMP out on its behavior, claiming that the company ‘…should not have been misleading the market’.
What’s next for AMP?
After these scathing remarks and the ensuing PR nightmare, many would find it unsurprising that AMP is taking a while to recover.
Its damage control plan has included taking steps to ‘reset the business’ and putting aside a $290 million fund for ‘potential advice remediation’.
AMP has also said it will be spending $70 million over the next two years to upgrade its risk management and compliance procedures.
How successful these measures will be is anyone’s guess, but it’s not looking likely that this will be an overnight project.
While the price may be a cheap buy, it’s clear that most of the market is staying well clear. It could be prudent to wait on this one.
For Money Morning
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