ASIC sues AMP for charging fees to dead customers.
The corporate watchdog has launched legal action against AMP for allegedly charging life insurance premiums and advice fees to people who had died.
The Australian Securities and Investments Commission said on Thursday that it has started civil penalty proceedings in the Federal Court against five AMP-owned companies which allegedly continued to collect fees despite being notified the customers had died.
ASIC further alleges that the AMP companies’ conduct demonstrated a system of conduct or pattern of behaviour that was, in all the circumstances, unconscionable.
The unconscionable practices are alleged to have occurred between May 2015 and August 2019.
The regulator alleges that AMP collected more than $500,000 in insurance premiums from the superannuation accounts of more than 2000 dead customers and more than $100,000 in advice fees from deceased customer accounts.
In a statement ASIC said AMP had failed to ensure that a system was in place that ensured that it did not charge deceased customers. Further, that AMP also had breached its “overarching obligations as an Australian financial services licensee to act efficiently, honestly and fairly.”
“ASIC commenced this proceeding because licensed financial services companies need to have robust compliance systems to ensure they meet their legal obligations to customers,” the regulator said in a statement.
“Customers, and their beneficiaries, should have confidence that they will be correctly and lawfully charged for any financial services or products.”
ASIC’s case focuses on the alleged breaches occurring after 26 May 2015 because any breaches occurring before that date are now statute-barred under the law.
The regulator noted that throughout 2019 and 2020, AMP had repaid more than $5 million to the estates or representatives of deceased customers for wrongfully charging premiums and advice fees to over 10,000 superannuation accounts.
Separately, ASIC said it has been monitoring remediation for fees for no service failures by financial services institutions, including AMP.
In a statement, AMP said it has taken this matter very seriously and we will now carefully consider the allegations raised by the regulator.
“We have been assisting ASIC with its investigation and will continue to engage constructively as part of the legal process,” said David Cullen, AMP group general counsel.
“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,” he added.
The companies named in the legal action are AMP Superannuation Limited; NM Superannuation Proprietary Limited; AMP Life Limited, (which is now owned by Resolution Life NZ); AMP Financial Planning Proprietary Limited and AMP Services Limited.