AMP settles class action for $110m
AMP has put to bed a class action relating to fee for no service scandals and misleading regulators as exposed by the Royal Commission but claims no responsibility in settling for $110 million.
The class action filed in June 2018, affected AMP shareholders whose share price tanked following revelations of alleged misconduct by the Financial Services Royal Commission.
In May 2019, the NSW Supreme Court ordered the litany of class actions levelled against AMP to merge into one after the Hayne Royal Commission exposed scathing revelations that included among other issues, charging fees for no services under various contexts.
The class actions of Maurice Blackburn, and Slater and Gordon were consolidated into one while the other three lawsuits were put on ice.
Maurice Blackburn referred to its class action under the plaintiff name of "Komlotex", while Slater and Gordon referred to its case as "Fernbrook".
Commenting on the settlement, Maurice Blackburn said: "The trial was due to commence today but it has now been vacated. The settlement is subject to the execution of a deed of settlement and approval by the Supreme Court of New South Wales."
In reaching a settlement, AMP said in a statement that it "makes no admission of liability".
"The majority of the settlement amount will be met by available insurance proceeds," AMP said.
"This 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 return by December 31, 2023."
The parties participated in mediation on June 29, 2023, facilitated by former Federal Court judge Peter Jacobson. This was their second attempt at mediation, but they were unable to reach an agreement until AMP announced on a settlement this morning.
Komlotex represented shareholders who owned AMP between May 10, 2012, and April 13, 2018, or American Depositary Receipts attached to AMP shares between June 7, 2012 and April 13, 2018.
At the crux of it, the class action alleged that AMP engaged in misconduct by charging fees for no services, withheld the breaches from ASIC, and then mislead ASIC about the nature and extent of the breaches.
Subsequently, AMP's share price declined substantially. In March 2017, AMP shares reached as high as $5.47 and drastically unravelled during and post the Royal Commission, hitting $2.45 at the end 2018. Shares traded at about $1.25 at the time of writing.
"As a result of AMP's contravening conduct, the price of AMP's securities was, prior to the Royal Commission disclosures, inflated above their true value and/or the price that would have prevailed in the event that the relevant facts were disclosed, or the relevant misleading conduct did not occur. Accordingly, the Plaintiffs and Group Members suffered loss and damage as a result of purchasing AMP securities during the Relevant Period at an inflated price," court documents show.
AMP closed its books on the first half of 2023 financial year provisioning $50 million for the buyer of last resort class action.
It is fighting two other legacy class actions that it says, "have not yet been quantified and participation has not yet been determined". These relate to superannuation, and commissions for advice and insurance.
"Currently, it is not possible to determine the ultimate impact of these claims, if any, upon AMP and so they also continue to remain contingent," AMP said.
Get stories like this in our newsletters.