Clayton Utz’s Past Conduct — Part 3: AMP, an “Independent” Report and the Records ASIC Sought

In Part 2, I wrote about an expert witness whose independence was examined in the Kazaa case. This final part turns to a different kind of independence: an investigation commissioned by an organisation into its own conduct. 

I have written about my family’s experience of an investigation arranged by my university and about the questions we were left asking when the people who made the complaint were not interviewed. The AMP matter is separate from ours. I’m examining it because the word “independent” was also central to what the public and a regulator were told.

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The report commissioned by AMP

In June 2017, AMP appointed Clayton Utz to investigate matters connected with its practice of charging some customers ongoing service fees when the services hadn’t been provided. The letter appointing Clayton Utz called for an external and independent investigation and said it would be independent of the business being examined.

Clayton Utz prepared a report for AMP. In its September 2018 interim report, the Financial Services Royal Commission examined the report’s drafting and AMP’s subsequent presentation of it to the Australian Securities and Investments Commission, ASIC.

The Commissioner proceeded on the basis that there had been 22 different drafts. He recorded that AMP made many suggestions about their content, including marked-up drafts and proposed amendments. Some proposed changes appeared to concern what the report said about senior executives’ knowledge and involvement. (https://www.royalcommission.gov.au/system/files/2020-09/volume-2.pdf).

A signed report was sent to AMP on 6 October 2017. The Royal Commission recorded a further request for changes after that, including a proposed statement concerning what AMP’s then chief executive knew. Another signed report was supplied on 16 October. AMP then presented the report and Clayton Utz’s letter of instructions to ASIC.

I find that sequence difficult to pass over. If an investigation is described to a regulator as independent, the regulator needs to understand the nature and extent of the commissioning organisation’s involvement in its final report.

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What the Royal Commission said—and did not say

The Commissioner considered that AMP may have made false representations to ASIC about the character of the Clayton Utz report. He said it might be open to conclude, given the number and nature of the changes to drafts, that AMP knew the report was not independent. He also said that such conduct, if established, might amount to misconduct.

Those are carefully qualified conclusions. The Commissioner didn’t make a finding of misconduct against a Clayton Utz partner in connection with the report. He expressly noted that he hadn’t heard evidence from the relevant AMP leaders or from a Clayton Utz partner and made no findings about their individual conduct.

Clayton Utz’s position was also reported at the time. A report in The Australian said the firm rejected the suggestion that its investigation or report to AMP’s board had been compromised. The firm’s position distinguished independence from the AMP business unit under investigation from independence of AMP as the client commissioning the work.

That distinction is at the heart of my question. 

When an institution says an investigation is “independent”, independent of whom, in what respects, and with what limits on the institution’s ability to influence the report?

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The interview notes ASIC sought

The story didn’t end with the Royal Commission.

In October 2018, ASIC issued a notice requiring Clayton Utz to produce records connected with interviews the firm had conducted with current and former AMP personnel. AMP claimed the records were protected by legal professional privilege. Clayton Utz didn’t produce them on that basis, and ASIC disputed the privilege claim.

In December 2018, ASIC applied to the Federal Court for orders concerning the records. On 7 March 2019, Clayton Utz produced the interview notes sought by ASIC without AMP maintaining a privilege claim over them. AMP agreed to pay ASIC’s costs, and the proceedings were dismissed by consent the following day. (https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2018-releases/18-379mr-asic-challenges-amp-and-clayton-utz-over-failure-to-produce-documents, https://asic.gov.au/about-asic/news-centre/find-a-media-release/2019-releases/19-052mr-amp-and-clayton-utz-surrender-in-asic-court-battle-over-failure-to-produce-documents)

That outcome should be described accurately. The court didn’t decide that Clayton Utz had unlawfully withheld the notes. They were produced before that question was determined. ASIC nevertheless said it was disappointed that the matter hadn’t been resolved sooner and explained why access to records matters to its investigations.

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Why I’m writing about this

I have described in earlier posts how an investigation arranged by my employer affected my family.

I’m asking a question that applies to any organisation using the language of “independence” to “reassure” people affected by its conduct. 

Who chooses the investigator? 

Who sets the terms? 

Who is interviewed? 

Who sees the drafts? 

Who can suggest changes? 

And what records can be examined if the description of the investigation is challenged?

Those questions are not answered by placing the word “independent” on a report. They’re answered by a “process” that can withstand scrutiny.

That’s why the AMP matter belongs in this series. The Royal Commission examined what happened between the commissioning organisation and the report’s authors. ASIC then sought the underlying interview notes. 

Independence was tested against the records, not accepted as a label.

People asked to “trust” an investigation deserve the same seriousness about how it was conducted.

Sources

• Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Interim Report, Volume 2, 28 September 2018, “Fees for no service: AMP”, particularly section 1.10.2.

• Merritt, C., “Banking royal commission: Clayton Utz ready for ‘real story’ on AMP report,” The Australian, 26 April 2018.

• Thomson, J., “AMP may have misled ASIC on amended Clayton Utz report,” The Australian Financial Review, 29 September 2018. 

• ASIC, “ASIC challenges AMP and Clayton Utz over failure to produce documents,” 17 December 2018.

• ASIC, “AMP and Clayton Utz surrender in ASIC court battle over failure to produce documents,” 11 March 2019.