The Federal Court has handed out penalties of $14.5 million to AMP companies for charging fees for services that were not provided to 1,452 superannuation members.
On Tuesday (20 September), ASIC confirmed AMP Superannuation, AMP Life, AMP Financial Planning, AMP Services, Charter Financial Planning and HillRoss Financial Services as the companies penalised.
The Court found between July 2015 and September 2018 that AMP deducted $356,188 in fees even though it was aware that the members had ceased their employment and could no longer access the advice services.
Although AMP has remediated $691,032 to affected customers, the Court found that AMP failed to investigate whether or not there was a systemic issue, despite many complaints over a lengthy period of time.
“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,” ASIC deputy chair Sarah Court said.
“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.”
ASIC commenced civil proceedings against AMP in July last year. In 2019, the companies admitted the allegations and AMP conducted a remediation program covering all affected superannuation accounts in which more than $900,000 was repaid to affected members for wrongfully charging advice fees to over 2,500 superannuation accounts.
On Tuesday, Justice Moshinsky concluded that AMP’s conduct was “extremely serious and systemic”.
“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),” Justice Moshinsky said.
“It is surprising and concerning that repeated complaints that the PSF had been wrongly debited from the superannuation accounts of members who had ceased employment with their employer-sponsor did not lead anyone within the defendants (in particular, within AMP Life) to question whether there was a systemic issue.
“While it is not suggested that senior management were involved in the contraventions, in my opinion it reflects very poorly on the organisational culture that this type of questioning did not occur.”
AMP acknowledged the Federal Court’s decision in its own statement on Tuesday.
“In 2018, AMP became aware that some AMP Flexible Super members continued to be charged a Plan Service Fee after transferring from their corporate super plan into a retail account. AMP took action to rectify the issue, self-reported it to ASIC, apologised to customers and subsequently completed the remediation of affected members,” the statement read.
“The remediation was completed in November 2019, with approximately 2,500 customers being remediated a total sum of approximately $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.”
Appalling Securities Investment Commission
Nek minut QAR legalises FFNS
I’ve always wondered what former politicians and judges do for the taxpayer with regards their public service pensions. That is also ‘fees for no service’. Therefore, they should be fined for their ‘extremely serious and systemic’ gravy train (and the taxpayer would get some money back for hospitals, schools, roads, etc.).
Any small advisor would have been banned and had their AFSL cancelled for this. Looks like AMP is too big to be allowed to fail! DIGUSTING!
Is AMP still around?
And, as very clearly stated a number of times in the judgement, many of the complaints were brought to AMP by their AUTHORISED REPRESENTATIVES trying to fix the problem for the clients… yet they were still ignored for years.
And probably forced out for their troubles
Fees for no service is an adviser issue – not the institution.
How on earth can any institution be made aware that an employee has left their position and switch off fees?
ASIC has one overruling mission: self-preservation and self-agrandissment. And we know who’ll ultimately fund the fine – as always – don’t we.
Remind me if any of their AFSLs were withdrawn by ASIC, or any executives or managers were banned?
If I recall correctly not one AMP Executive or Manager has been charged for their part in this fraud. THAT, in itself, is criminal
When is these penalties going to cease? The constant attack on financial institutions is out of control. There needs to be a line drawn in the sand. There has been no let up since the Hayne Royal Commission. There is no room to breathe anymore.
When those who rorted the system compensate those who were affected. They should also be made to pay a large chunk of change into the CSLR because those of us who have acted on behalf of our client with their best interest now get to fund this scheme which is the makings of the banks, IOOF and AMP.
except that the compensation to affected clients was made years ago – this is $14mill fine is ASIC responding to their appalling short-comings identified during RC
Spanish inquisition lasted for some time. Seems to be no doubt about it, if you are not Industry Super, you will be found to have a problem.
As Kenny Hayne said in the royal commission, “Why not litigate?”
More disturbingly is that ASIC pockets $14.5 Million from AMP but they won’t offset that against the adviser levy or share it with the “affected” customers now will they??
It is about time these financial institutions were shown that they cannot do as they please……it’s just a pity that a $14m fine does absolutely nothing to deter them. THe executive that oversaw this should be banned for life, just as would happen to a financial adviser if he ran his own AFSL and did this.
It should have read ‘When are these penalties going to cease?’ Apologies for the poor grammar. It must be due to having my head bashed by these bureaucrats and so- called law makers who take pleasure in attacking soft targets. One day the screw will turn where the backlash will be will stun them.
Not sure AMP is a soft target. The people that they screwed over where the soft targets
Only a modicum of justice for the wealth of pain and damage they have caused not only to the industry but more importantly ‘their’ advisers and loyal clients