The Australian Federal Court has found four companies that are or were part of the AMP Group breached the law when charging life insurance premiums and advice fees from the superannuation accounts of more than 2,000 deceased customers.
The Federal Court ordered two of these AMP companies to pay a combined penalty of $24m (£12.8m, $16m, €14.7m) for the breaches.
The AMP Companies are:
- AMP Life Limited, which is now part of the Resolution Life Group, but was part of AMP when the conduct occurred – penalised $18m;
- AMP Financial Planning Proprietary Limited – penalised $6m;
- AMP Superannuation Limited – breaches that did not include a civil penalty; and
- NM Superannuation Proprietary Limited – breaches that did not include a civil penalty.
Australian Securities & Investments Commission (Asic) deputy chair Sarah Court said: “The AMP companies had been notified that these customers had died, and despite this, continued to charge premiums and fees on their super accounts.
“Customers, and their beneficiaries, expect financial services providers to have the proper systems in place to ensure, once notified, deceased customers are no longer charged. These systems were inadequate, and customers were let down.”
Details
Asic said that both AMP Life Limited and AMP Financial Planning admitted that they engaged in unconscionable conduct by deducting and/or failing to properly refund insurance premiums and advice fees respectively from superannuation members after being notified of their deaths.
“This misconduct represents a fundamental breach of trust between a customer and their financial services provider”, concluded Court.
The AMP companies received over $500,000 in insurance premiums from the superannuation accounts of deceased customers, with at least $350,000 charged between May 2015 and August 2019.
Additionally, the AMP companies received over $100,000 in advice fees from deceased customer accounts, with at least $75,000 being charged between May 2015 and August 2019.
AMP Life Limited and AMP Financial Planning also admitted that they accepted insurance premiums and advice fees even though, at the time they received those fees, there were reasonable grounds for believing that they would not be able to supply the insurance or advice.
The Court also found all four AMP companies contravened their overarching obligations as Australian financial services licensees to act efficiently, honestly and fairly.
Vulnerable
In handing down her decision, Justice Hespe described the conduct as “very serious, wrongful behaviour”, noting “the deceased members affected were vulnerable”, obviously unable to monitor their accounts and were entirely reliant on the representatives of their estates.
She added: “The beneficiaries of those estates involved individuals who may be expected to have been emotionally vulnerable and unlikely to be familiar with the terms of a policy not issued to them or on their behalf.
“The lack of oversight and executive management awareness of the issue was part of the problem. 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.”
