Australian Treasurer Scott Morrison warned that financial sector executives responsible for widespread breaches of corporate law could face jail.
Meanwhile, a powerful judicial inquiry heard more evidence of misconduct by the country’s top financial institutions.
Morrison’s comments on Wednesday were made after executives at AMP Ltd (AMP.AX), Australia’s largest wealth manager, admitted a day earlier that employees had lied to the corporate regulator for almost a decade.
They have done so to cover up its practice of charging thousands of customers for services they did not provide.
In further testimony to the so-called-Royal-Commission on Wednesday, AMP executives admitted that it had charged users of online-platforms for advice-fees despite not receiving the permission required by law.
“What has occurred here and what has been admitted to in the Royal Commission by AMP is deeply disturbing,” Morrison told reporters.
“This type of behavior can attract penalties which include jail time. That is how serious these things are.”
The government-backed Royal Commission into Australia’s banking sector is just a couple of months into what is expected to be a year-long investigation.
It is also to conduct public grilling of senior executives in the country’s financial sector.
The inquiry will be able to make wide-ranging recommendations including legislative changes and criminal or civil prosecutions.
A similar inquiry in 2001 that looked into the collapse of the country’s second-biggest insurer, HIH Insurance, led to criminal convictions and prison sentences.
“AMP is deeply disappointed that its advice business has charged customers fees where service has not been provided.
”It is also disappointed that it was misleading the regulator in this regard.
“We apologize unreservedly to our customers, our regulator and the community more broadly,” an AMP spokeswoman said in an emailed statement.
AMP shares fell 2.2 per cent on Wednesday, after sliding 4.4 per cent the previous day. The broader market was up 0.4 per cent on Wednesday.
The Australian Securities and Investments Commission (ASIC), which has been criticized for lacking clout amid a series of corporate scandals, said that it was cooperating with the inquiry.
It also said that it had done 18 “examinations” of AMP staff related to the misappropriation of fees.
“Making false or misleading statements to ASIC can result in civil and criminal sanctions,” the regulator said in a statement.
The center-right government agreed to call the inquiry in late 2017 after years of scandals in Australia’s financial sector.
It included interest-rate rigging, accusations that some institutions withheld legitimate insurance payouts, and accusations of money-laundering.
It is currently focusing on the provision of financial advice by AMP and the four largest banks.
The banks are Australia and New Zealand Banking Group, Commonwealth Bank of Australia , National Australia Bank and Westpac Banking Corp.
In coming months, the inquiry will turn its attention to large insurers and pension funds.