AMP issued $24m penalty for billing deceased clients
AMP Life and AMP Financial Planning have been issued a combined $24 million penalty by the Federal Court in relation to charging deceased clients for insurance and financial advice.
The Court had found four companies that are or were part of the AMP Group - AMP trustees AMP Super and NM Super, AMP Financial Planning, AMP Life, and AMP Services - breached the law when charging life insurance premiums and advice fees from the superannuation accounts of more than 2,000 deceased customers.
The AMP companies received more than $500,000 in insurance premiums from the superannuation accounts of deceased customers, with at least $350,000 charged between May 2015 and August 2019.
The companies also received more than $100,000 in advice fees from deceased customer accounts, with at least $75,000 being charged between May 2015 and August 2019.
In 2018, AMP had self-reported issues with its processes to the corporate regulator.
“The AMP companies had been notified that these customers had died, and despite this, continued to charge premiums and fees on their super accounts,” ASIC Deputy Chair Sarah Court said.
“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.”
In handing down her decision, Justice Hespe described the conduct as “very serious, wrongful behaviour”.
She noted that the deceased members affected were vulnerable, obviously unable to monitor their accounts, and were entirely reliant on the representatives of their estates.
In a statement to the Australian Securities Exchange (ASX), AMP said it had taken action to change its processes and policies to address the issues and remediated all impacted customer accounts.
In total, 10,155 customers accounts had been remediated from 2011 to 2019, to a sum of $5.2 million, which included compensation for lost earnings. The remediation was completed in May 2020.
AUTHOR
Rhea Nath
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
