Four companies associated with the AMP Group have been found to have acted unlawfully by the Federal Court after charging life insurance premiums and advice fees from the superannuation accounts of more than 2000 deceased customers. The court has mandated that two of these AMP companies pay a total penalty of $24 million for the infringements.
The Australian Securities and Investments Commission (ASIC) deputy chair Sarah Court said: “The AMP 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.”
AMP Life Limited and AMP Financial Planning conceded to having engaged in unconscionable conduct by improperly deducting or failing to properly reimburse insurance premiums and advisory fees from superannuation members who had passed away after being notified of their deaths.
“This misconduct represents a fundamental breach of trust between a customer and their financial services provider,” concluded Ms Court.
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 admitted that they 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. 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 Lisa 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.
“The beneficiaries of those estates involved individuals who may be expected to have been emotionally vulnerable and unlikely to be familiar with the terms of a policy not issued to them or on their behalf.”
Justice Hespe further noted the systems failures by AMP, stating: “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. 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.”
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.
In a statement to the Australian Securities Exchange (ASX), AMP said it had taken action to change its processes and policies to address the issues and remediated all impacted customer accounts.
In total, 10,155 customers accounts had been remediated from 2011 to 2019, to a sum of $5.2 million, which included compensation for lost earnings. The remediation was completed in May 2020.
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