AMP fined $14.5m for fees for no service
AMP Limited has been fined $14.5 million by the Federal Court for charging fees for no service to 1,452 superannuation members.
The members had been paying fees in return for access to general financial advice as part of an agreement with their employer and AMP. They continued to be charged the advice even after they had left the employer.
The Court found between July 2015 and September 2018, AMP deducted $356,188 in fees even though it was aware the member had ceased their employment and could no longer access the advice services. Although AMP has remediated $691,032 to affected customers, the Court found AMP failed to investigate whether or not there was a systemic issue, despite many complaints over a lengthy period of time.
The five AMP companies were:
- AMP Superannuation Limited;
- AMP Financial Planning Proprietary Limited;
- Charter Financial Planning Limited;
- Hillross Financial Services Limited; and
- AMP Life Limited (now owned by Resolution Life NZ, but was part of AMP when the misconduct occurred).
The judge, Justice Moshinsky, criticized AMP for failing to investigate whether it was a systemic issue within the firm.
“In relation to ‘corporate culture’, I consider that the failure to investigate whether or not there was a systemic issue, despite many complaints, over a lengthy period of time, reflects very poorly on the defendants (in particular, AMP Life).”
ASIC deputy chair, Sarah Court, said: “AMP was aware it was charging fees for no service to these members but did not take the proper steps to prevent it from continuing. AMP admitted liability regarding these failures and admitted it did not have the proper systems and compliance arrangements in place to ensure the payments ceased when members left their employer.
‘Superannuation trustees should treat the penalty imposed today as an important reminder to maintain robust internal governance and assurance arrangements. Trustees are responsible for ensuring they only deduct fees from member accounts for services actually provided. If they fail in this obligation, they could face significant penalties,’ concluded Ms Court.
The Court also ordered that AMP publish an adverse publicity notice on its websites for one year.
In an announcement to the Australian Securities Exchange, AMP responded and said: “AMP took action to rectify the issue, self-reported it to ASIC, apologised to customers and subsequently completed the remediation of affected members.
“The remediation was completed in November 2019, with approximately 2,500 customers being remediated a total sum of $900,000 covering fees charged and lost earnings.
“The penalty of $14.5 million handed down today has already been provisioned by AMP in its 30 June, 2022 half-year financial statements.”
AUTHOR
Laura Dew
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