AMP sued for charging more than 2000 dead clients
ASIC has taken Federal Court action against AMP for allegedly charging more than 2000 deceased clients insurance premiums and financial advice fees after being notified of their death.
The action relates to five companies that are or were subsidiaries of AMP between May 2015 and August 2019. These include AMP Superannuation Limited; NM Superannuation Proprietary Limited; AMP Life Limited, AMP Financial Planning Proprietary Limited; AMP Services Limited. AMP Life was part of AMP when the conduct occurred, but has since been acquired by Resolution Life.
ASIC alleges the companies deducted life insurance premiums and financial advice fess from 2069 deceased customers' superannuation accounts despite being notified that the customer had died. This amounted to $500,000 in insurance premiums, at least $350,000 of which was received in the period in question. A further $100,000 was deducted in advice fees, with $75,000 received during the period.
The misconduct was first revealed by the Hayne Royal Commission in 2018, where it was made public that staff were aware deceased client accounts were being charged. According to ASIC's filing, this conduct continued on for a further
While the conduct actually dates back to 2011, any breaches prior to 2015 are now statute-barred, ASIC said.
According to documents filed by ASIC, in November 2019 AMP notified the regulator that a total of 9308 deceased members had been impacted since 2011. AMP later told ASIC it was 10,155 accounts that were affected.
In a statement to the ASX, AMP confirmed a remediation program commenced in 2019 found breaches dated back to 2011. The program returned $5.3 million to estates and representatives of deceased customers, including some that are the subject of this action.
ASIC is also alleging the companies failed to ensure a system was in place to prevent this from happening, and failed to ensure that a system was in place to manage conflicts of interest between the AMP companies' interests and members' interests. This, despite super members paying administration fees to enable the correct administration of their account, ASIC pointed out.
"Members had died and were thus unable to take steps to remedy this conduct. Member representatives who were responsible for administering the members' estate were likely coming to the member's superannuation product for the first time, and thus unlikely to be aware of the terms and conditions governing the member's superannuation product," documents filed by ASIC read.
"Some representatives (such as partners, family members or friends) were likely to be transacting at a time of distress. Members and their representatives were thus dependent on the defendants having adequate systems and procedures for ensuring that premiums and advice fees were not deducted following a member's death."
ASIC added that AMP and its subsidiaries had no reasonable grounds for believing they could supply life insurance or personal advice to the members in question "at any time or at all".
"The deceased member had died. There was no longer any life to insure... The deceased member had died. There was no longer any personal advice to provide," the regulator pointed out.
AMP and the aforementioned subsidiaries contravened their overarching obligations as Australian financial services licensees to act efficiently, honestly and fairly, the regulator said.
"ASIC further alleges that the AMP companies' conduct demonstrated a system of conduct or pattern of behaviour that was, in all the circumstances, unconscionable," ASIC said.
ASIC is seeking declarations of contraventions of the ASIC Act and Corporations Act, and is also seeking pecuniary penalties and other orders to be made by the court.
AMP acknowledged the action and said it is engaging constructively with ASIC on the matter, with general counsel David Cullen saying the business takes the action "very seriously".
"AMP apologises to all customers and beneficiaries who were impacted by this matter," Cullen said.
"ASIC commenced this proceeding because licenced financial services companies need to have robust compliance systems to ensure they meet their legal obligations to customers," ASIC said.
"Customers, and their beneficiaries, should have confidence that they will be correctly and lawfully charged for any financial services or products."