ASIC suing AMP for charging deceased customers

The five companies that are, or were, part of the AMP Limited group that are set to be subject to the civil penalty proceedings – filed in the Federal Court of Australia – are AMP Superannuation Limited, NM Superannuation Proprietary Limited, AMP Life Limited (now owned by Resolution Life NZ, “but was part of AMP when the conduct occurred”, according to ASIC), AMP Financial Planning Proprietary Limited and AMP Services Limited.

The watchdog is claiming that these companies received over half a million dollars in insurance premiums and over $100,000 in advice fees from super accounts of customers who had passed away, most of which came in the period between May 2019 and August 2019.

ASIC will be alleging that, from May 2019 to August 2019, the aforementioned AMP companies did one or more of the following: deduct life insurance premiums from 2,069 deceased customers’ super accounts, despite being notified of those customers’ deaths, and deducted financial advice fees from deceased customers’ super accounts despite being notified of those customers’ deaths.

It will also be alleged that there was failure to ensure that a system existed to make sure that deceased customers were not charged, that a system existed to manage conflicts of interest between the companies’ interests in continuing to charge premiums and advice fees and members’ interests in premiums and advice fees ceasing after death, and that there was a contravention of AFSL licensee obligations to act efficiently, honestly and fairly.

Moreover, ASIC noted, it will allege that the conduct of the AMP companies “demonstrated a system of conduct or pattern of behaviour that was, in all the circumstances, unconscionable”.

The watchdog will be seeking declarations of contraventions of the ASIC Act and Corporations Act, as well as pecuniary penalties, from the Federal Court.

Proceedings are being launched, ASIC said in a statement, “proceeding because licenced financial services companies need to have robust compliance systems to ensure they meet their legal obligations to customers”.

“Customers, and their beneficiaries, should have confidence that they will be correctly and lawfully charged for any financial services or products,” the watchdog proclaimed.

In a statement issued on the morning of 27 May, AMP acknowledged the civil proceedings against it. The banking giant said it had identified issues with its processes regarding deceased customer accounts in 2018 and self-reported to the regulator at that time. Moreover, it said it has taken action to change its processes and policies to address those issues and “has remediated all impacted customer accounts”. 

In total, AMP said, it remediated 10,155 customer accounts a total of $5.3 million, including compensation for lost earnings. 

AMP Group general counsel David Cullen said that AMP is taking the matter “very seriously” and will be carefully considering the allegations raised by the corporate watchdog. 

“We have been assisting ASIC with its investigation and will continue to engage constructively as part of the legal process,” he 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.”

Listing for a case management hearing has not yet occurred.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.