The corporate regulator has commenced court action against AMP Superannuation, NM Superannuation Proprietary, AMP Life (which is now owned by Resolution Life NZ, but was within the AMP group during the misconduct), AMP Financial Planning Proprietary and AMP Services.
ASIC has alleged that the entities were involved in charging life insurance premiums and advice fees to more than 2,000 deceased customers, demonstrating a system of conduct that was “in all of the circumstances, unconscionable”.
According to the watchdog, from May 2015 to August 2019, each of the companies did one or more of the following:
- Deducted life insurance premiums from 2,069 customers’ superannuation accounts despite being notified that the individuals had died;
- Deducted financial advice fees from deceased customers’ superannuation accounts despite being notified that they had died;
- Failed to ensure that a system was in place to ensure that it did not charge diseased customers;
- Failed to ensure that a system was in place to manage conflicts of interest between the AMP companies’ interests in continuing to charge premiums and advice fees against members’ interests; and
- Contravened their overarching obligations as Australian financial services licensees to act efficiently, honestly and fairly.
The AMP companies reportedly collected more than $500,000 in insurance premiums from the super accounts of dead customers, with at least $350,000 charged between May 2015 to August 2019.
There was a further noted sum of more than $100,000 in advice fees gained from deceased customer accounts, with at least $75,000 being charged between May 2015 and August 2019.
ASIC has focused on the alleged breaches occurring after 26 May 2015, because any breaches occurring before are now statute-barred under the law. But the misconduct went back as far as 2011, as acknowledged by AMP in its 2019-20 remediation program.
Around $5.3 million was repaid to the estates or representatives of deceased customers (including those the subject of ASIC’s case) across 10,155 wrongfully charged superannuation accounts from 2011 to 2019. The remediation was completed in May 2020.
AMP had also been aware it was charging dead customers life insurance premiums as far back as 2016, as revealed in staff emails during the royal commission. But as stated by AMP on Thursday (27 May), it self-reported the issues to the regulator in 2018.
When asked about the matter in 2019, former AMP Australia boss Alex Wade told a parliamentary committee that dead clients had been charged due to the “complexity” of the 170-year-old organisation.
Responding to new lawsuit, AMP Group general counsel David Cullen commented that the company has “taken the matter very seriously” and will carefully consider the allegations raised.
“We have been investigating and will continue to engage constructively as part of the legal process,” Mr Cullen said
“When we discovered the issues, we immediately moved to change our processes and systems and took action to ensure the beneficiaries of customers impacted were fully remediated.
“AMP apologises to all customers and beneficiaries who were impacted by this matter.”
ASIC has sought declarations of contraventions of the ASIC Act and Corporations Act in the new proceeding. It is also seeking pecuniary penalties and other orders to be made by the Federal Court.
The lawsuit is yet to be listed for a case management hearing.
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Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth for InvestorDaily and ifa.