AMP agrees to $110m settlement in class action

AMP Financial (AMP) has announced that an agreement has been reached to settle the shareholder class action brought by Komlotex Pty Ltd in June 2018, for a total of $110 million.

The settlement is pending the finalisation and execution of a settlement deed, subject to approval by the Supreme Court of NSW.

A trial is scheduled to commence on 21 August 2023, with an expected duration of three to four weeks.

The class action, initiated by Maurice Blackburn Lawyers on 7 June 2018, represented AMP Limited (ASX: AMP) shareholders impacted by alleged systemic misconduct unveiled during the financial services royal commission.

The misconduct led to a drop in AMP’s share price, prompting shareholders who purchased or acquired shares between 10 May 2012 and 13 April 2018 to seek compensation for their losses. In a statement today (21 August), AMP said: “In reaching a settlement, AMP makes no admission of liability. The majority of the settlement amount will be met by available insurance proceeds.

“The settlement does not impact the current second tranche of capital return to shareholders and we remain committed to updating the market on the third tranche of capital by 31 December.”

Maurice Blackburn undertook the class action on a “no win, no fee” basis. The firm highlighted that AMP became the subject of scrutiny by the financial services royal commission from 16 April 2018.

During the investigation, it was revealed that AMP had been charging clients ongoing fees without providing the corresponding services, along with instances of alleged misleading reporting to ASIC about fees charged.

These revelations prompted a market reaction, causing an approximately 11 per cent decline in AMP’s share price within the first week, according to the law firm.

Subsequently, the resignations of Catherine Brenner (ex-chairman) and Craig Meller (ex-chief executive), along with the resignation of two other directors, were observed.

Consolidation of proceeding

In terms of procedural history, the Supreme Court of NSW ruled on 23 May 2019 that the Maurice Blackburn proceeding (“Komlotex”) would be consolidated with the Slater & Gordon proceeding (“Fernbrook”).

The consolidated proceeding was favoured to continue, leading to the permanent stay of competing class action proceedings against AMP. This decision was appealed but not upheld by both the NSW Court of Appeal and the High Court of Australia.

Efforts to resolve the class action through mediation on 29 June 2023 proved unsuccessful. Consequently, the case is slated to proceed to trial starting 21 August 2023 with an estimated duration of three to four weeks.

[Related: Colonial First State Investments settles class action for $100m]