The Federal Court has found four companies that are, or were, part of the AMP Group breached the law when charging life insurance premiums and advice fees from the superannuation accounts of more than 2,000 deceased customers.
On Friday 19 May the Federal Court ordered two of these AMP companies to pay a combined penalty of $24 million for the breaches.
ASIC Deputy Chair Sarah Court said the companies had been notified that these customers had died, and despite this, continued to charge premiums and fees on their super accounts.
“Customers, and their beneficiaries, expect financial services providers to have the proper systems in place to ensure, once notified, deceased customers are no longer charged. These systems were inadequate, and customers were let down,” said Court.
…This misconduct represents a fundamental breach of trust…
Both AMP Life Limited and AMP Financial Planning admitted they engaged in “unconscionable conduct” by deducting and/or failing to properly refund insurance premiums and advice fees respectively from superannuation members after being notified of their deaths.
“This misconduct represents a fundamental breach of trust between a customer and their financial services provider,” said Court.
The AMP Companies are:
- AMP Life Limited, which is now part of the Resolution Life Group, but was part of AMP when the conduct occurred – penalised $18 million
- AMP Financial Planning Proprietary Limited – penalised $6 million
- AMP Superannuation Limited – breaches that did not include a civil penalty
- NM Superannuation Proprietary Limited – breaches that did not include a civil penalty
The AMP companies received more than $500,000 in insurance premiums from the superannuation accounts of deceased customers, with at least $350,000 charged between May 2015 and August 2019.
Additionally, the AMP companies received more than $100,000 in advice fees from deceased customer accounts, with at least $75,000 being charged between May 2015 and August 2019.
AMP Life Limited and AMP Financial Planning also accepted insurance premiums and advice fees even though, at the time they received those fees, there were reasonable grounds for believing that they would not be able to supply the insurance or advice.
…very serious, wrongful behaviour…
The court also found all four AMP companies contravened their overarching obligations as Australian financial services licensees to act efficiently, honestly and fairly.
In handing down her decision, Justice Hespe described the conduct as “very serious, wrongful behaviour”, noting “…the deceased members affected were vulnerable, obviously unable to monitor their accounts and were entirely reliant on the representatives of their estates.”
Justice Hespe noted the systems failures by AMP, saying the lack of oversight and executive management awareness of the issue was part of the problem.
“The culture of the AMP Group assumed no systemic issues,” said Hespe. “It resulted in a failure to have a process in place that was capable of identifying, investigating and remediating systemic issues for many years. The failure reflects poorly on the defendants.”
AMP Statement
A statement from AMP has acknowledged the conclusion of proceedings brought by ASIC.
It states that in 2018, AMP identified issues with its processes regarding deceased customer accounts and self-reported to the regulator.
AMP says it took action to change its processes and policies to address these issues and remediated all impacted customer accounts.
“In total, AMP remediated 10,155 customer accounts a sum of approximately A$5.2 million for the period from 2011 to 2019, which included compensation for lost earnings. The remediation was completed in May 2020,” it says.
AMP Group General Counsel David Cullen states: “AMP apologises to all beneficiaries of those affected by this matter. When we identified the issue in 2018, we reported it to the regulator and worked hard to remediate the estates of affected customers as promptly as possible.”
He says the firm has “…made strong progress in becoming a customer-focused and purpose-led organisation, and this historical matter is not reflective of the AMP we are today.”
“We have made significant changes to our systems and processes in recent years designed to prevent this from recurring. We engaged constructively with ASIC throughout the legal process, and we acknowledge [the] judgment and the conclusion of the matter.”
The penalty handed down was fully provisioned for by AMP in its financial statements for the year ended 31 December 2022.
