Can the AMP (ASX:AMP) share price start afresh?

The AMP Ltd (ASX: AMP) share price has shown small signs of recovery since releasing its Q3 update. It seems like the prudential regulator has dished out its last piece of punishment; so, is the AMP share price taking a turn for the better?

AMP share price

Is this the last penalty for AMP?

AMP has agreed to enter an enforceable undertaking imposed by the Australian Prudential Regulatory Authority (APRA).

An enforceable undertaking is similar to a rehabilitation program.

In this case, APRA identified a list of remaining breaches relating to the royal commission fallout in 2018 and AMP admitted to such failures.

The issues mainly relate to inadequate risk management and governance frameworks in the superannuation business.

AMP will need to identify the root causes of these issues and demonstrate how it will implement changes to prevent a recurrence.

AMP notes the costs involved in undertaking such changes will be around $45 million.

Potential ASX beneficiaries

While AMP continues to spend time and resources on rehabilitation, more and more financial advisers are leaving big financial institutions.

As a result, wealth platform disruptors continue to take market share away from incumbents like AMP.

Advisers want to start afresh and build their own brand rather than remain with the somewhat tainted financial stalwarts.

Netwealth Group Ltd (ASX: NWL) and Hub24 Ltd (ASX: HUB) are two wealth platform disruptors leading the pack.

My take

It seems like this may be the final blow from the Royal Commission fallout, which could prompt a fresh start.

AMP has already fully divested its long-standing life insurance arm and split up the AMP Capital arm.

If there were ever a time to consider investing in AMP, it would probably be now.

AMP is close to clearing-out all its cobwebs and can focus on its core services to rebuild its reputation.

In saying this, I would monitor the trend of outflow of funds from members to potentially determine when AMP has actually hit rock bottom.

On top of this, there needs to be a massive change in culture and personnel. If AMP can execute on these fronts, it’s capable of leveraging its large existing client base.

Information warning: The information in this article was published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169

Raymond Jang

Raymond is a Rask Investment Analyst. He has extensive experience in analysing and investigating businesses from his roles at a national accounting firm and at ASIC. Raymond is a Chartered Accountant and holds a Bachelor of Commerce from the University of NSW. His curiosity about the world and drive to find high-quality businesses is what gets him out of bed every morning. Outside of writing and investing, you will find Raymond playing football in a cage (trust us, it's more fun than it sounds) or at a park. If you enjoyed his analysis, check out our Rask services.