2020 is meant to herald a new era in financial planning.

An era where the industry makes big strides towards becoming the trusted profession it should be.

But with the new year, and decade, less than a month old, the operator of the country's biggest network of financial planners has put a big dent in those high hopes.

AMP is a company whose board and senior management were decimated by the banking royal commission.

A company that has seen billions of dollars in funds withdrawn by disgruntled customers.

A company that, by its own admission, is facing a bill of around $1.2 billion for charging fees for no service and giving inappropriate advice.

And yet, if the latest revelations about AMP's behaviour are any guide, it appears little has changed.

Gouging is still the norm.

As my colleague, Elysse Morgan, explains in her excellent expose, AMP's idea of compensating those superannuation customers it had ripped off was to put their money into AMP's Eligible Rollover Super Fund (ERF), and then charge high fees.

The prudential regulator, APRA, has a firm set of guidelines about rollover funds.

"ERFs are designed as a temporary repository for the superannuation of members whose details are lost or who, because of their circumstances, cannot remain as a member of their former fund," APRA says.

They are not free though, and they're passive investments with returns on the low side.

According to the Product Disclosure Statement for AMP's ERF, and based on the company's $1.2 billion admission to the royal commission, those fees could have delivered it up to $40 million over the course of a year.

Give back the ill-gotten gains on one hand, take them again with the other.

As a "by the way" note, AMP could not simply refund the money because superannuation must meet what's known as a "condition of release" to be paid out.

Fee-for-no-service is not a condition of release.

Underperforming fund

However, where AMP really thumbs its nose at those trying to clean up the financial advice industry, is putting the compensation money into its Eligible Rollover Fund in the first place.

As Morgan explains in her article, AMP's ERF has underperformed the median for the ERF market by more than 40 per cent over the past 10 years.

By going down this route, AMP appears to be clearly breaching the Best Interest Duty, which was inserted into the Corporations Act as part of the FOFA reforms to try to stop customers from being ripped off.

How can AMP argue that putting money into an underperforming fund, when so many other options are available, is in their customers' best interest?

AMP, of course, wants to keep the money for itself, and take the fees.

It would not have considered putting the money into another company's better-performing fund because it gets nothing for doing that, even if the customer wins.

The Federal Government's Financial Advisor Standards and Ethics Authority (FASEA) has built on the Best Interest Duty with its Code of Ethics, which came into force on January 1.

Standard Three of that code says: "You must not advise, refer or act in any other manner where you have a conflict of interest or duty."

FASEA adds by way of explanation: "You will breach Standard 3 if a disinterested person, in possession of all the facts, might reasonably conclude that the form of variable income [e.g. brokerage fees, asset-based fees or commissions] could induce an adviser to act in a manner inconsistent with the best interests of the client or the other provisions of the code."

Money grab

Who benefits from money being put into AMP funds?

Answer: AMP.

For its part, AMP will rightly say that the Best Interest Duty and FASEA'S Code of Ethics apply only to advice, and that there was no advice in the repayment of the money ripped off from customers.

True, but as the biggest financial advice house in Australia, would AMP seriously argue that acting in customers' best interests applies only to some parts of its business and not others?

Would it also argue that it should not be leading the way in upholding higher standards?

Does it think its customers will differentiate between the financial advice division, and other parts of the company?

Even just asking its victims what they wanted done with their compensation money would have been more in tune with the obligation to put customers first.

AMP's actions have shown that people's worst fears about the financial services sector are still well founded.

It seems like a grab for money, precisely what got AMP into trouble in the first place.

If the biggest player in the financial advice space is perceived to not be supporting the principles designed to make the industry a safer place, the road to becoming a trusted profession still has a long way to go.

And with AMP still struggling to repair the damage to its balance sheet and reputation caused by the revelations at the banking royal commission, it's a PR fiasco to rival some we've seen in the world of politics over the last few weeks.