AMP’s dead client charges are hard to live down

Being a journalist requires tenacity. You’re on the hunt for fresh angles and breaking stories. It is competitive. Being hungry helps.

But when the Hayne Royal Commission fell into the laps of the financial services press corps, all tenacity went right out the window. Our jobs were largely done for us in 2018. It was a very lazy year – all we had to do was tune in, watch and record. The stories were so ridiculous they wrote themselves.

But for banks, super funds, insurers and wealth management groups it was a nightmare. Nobody had held their feet to the fire like Hayne’s all-star legal team. No investigative reporter had come close to uncovering the madness that would be revealed by the royal commission.

Some companies fared better than others in the pitiless one-sided punching match that the spectacle eventually became. It was gory. At times it made you wince. Revelations that AMP had been hitting up dead Aussies for advice fees was a particularly cringeworthy moment.

AMP got royally spanked by the commission. Afterwards it limped away from Hayne’s clutches, only to fall into a state of despair as it fronted even more inquiries and a plethora of sex scandals.

In November 2019, almost a year after Hayne’s final report had been released, AMP was hauled before another parliamentary committee. And they had their paddles ready.

On 22 November 2019, AMP Australia CEO Alex Wade was asked by Labor MP Dr Andrew Leigh about the wealth giant’s strategy of charging members for life insurance even after they had died and the group had been informed that they had died.

“When did that practice cease?” Dr Leigh asked.

“The charging of deceased clients? I believed we turned it off in the middle of last year. It is currently going through remediation, which will be completed by the end of this year," Mr Wade said.

Dr Leigh then asked the AMP CEO why dead clients had been charged in the first place.

Good question.

“Complexity,” Mr Wade replied.

“It doesn’t seem that hard to me,” Dr Leigh said. “They die, you stop charging them life insurance.”

Mr Wade said that while it might sound that simple, the reality is AMP is an “incredibly complex” organisation, “and not just from a product point of view.”

Alex Wade is long gone now. His LinkedIn profile shows AMP was his last employer. In 2021, he left the company quickly and quietly after news reports emerged that he had allegedly sent explicit photographs to his female colleagues.

On Friday (19 May), the Federal Court ordered AMP Life and AMP Financial Planning to pay a penalty of $24 million in relation to contraventions concerning the deduction and retention of life insurance premiums and advice service fees from the superannuation accounts of deceased customers.

Justice Lisa Hespe described the conduct as “very serious, wrongful behaviour” and said 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,” she said.

By now AMP knows how to take a beating. The battle-hardened bank is well-accustomed to hefty fines and the lashing tongue of judges. It is a scarred relic of a different era. Whether it has enough tenacity in the tank for a good redemption story remains to be seen.

But even with the best rehabilitation in the world, it’s hard to live down the fact that you knowingly profited from the dead.