Being a journalist requires tenacity. You’re on the hunt for fresh angles and breaking stories. It is competitive. Being hungry helps.
But when the Hayne Royal Commission fell into the laps of the financial services press corps, all tenacity went right out the window. Our jobs were largely done for us in 2018. It was a very lazy year – all we had to do was tune in, watch and record. The stories were so ridiculous they wrote themselves.
But for banks, super funds, insurers and wealth management groups it was a nightmare. Nobody had held their feet to the fire like Hayne’s all-star legal team. No investigative reporter had come close to uncovering the madness that would be revealed by the royal commission.
Some companies fared better than others in the pitiless one-sided punching match that the spectacle eventually became. It was gory. At times it made you wince. Revelations that AMP had been hitting up dead Aussies for advice fees was a particularly cringeworthy moment.
AMP got royally spanked by the commission. Afterwards it limped away from Hayne’s clutches, only to fall into a state of despair as it fronted even more inquiries and a plethora of sex scandals.
In November 2019, almost a year after Hayne’s final report had been released, AMP was hauled before another parliamentary committee. And they had their paddles ready.
On 22 November 2019, AMP Australia CEO Alex Wade was asked by Labor MP Dr Andrew Leigh about the wealth giant’s strategy of charging members for life insurance even after they had died and the group had been informed that they had died.
“When did that practice cease?” Dr Leigh asked.
“The charging of deceased clients? I believed we turned it off in the middle of last year. It is currently going through remediation, which will be completed by the end of this year,” Mr Wade said.
Dr Leigh then asked the AMP CEO why dead clients had been charged in the first place.
Good question.
“Complexity,” Mr Wade replied.
“It doesn’t seem that hard to me,” Dr Leigh said. “They die, you stop charging them life insurance.”
Mr Wade said that while it might sound that simple, the reality is AMP is an “incredibly complex” organisation, “and not just from a product point of view.”
Alex Wade is long gone now. His LinkedIn profile shows AMP was his last employer. In 2021, he left the company quickly and quietly after news reports emerged that he had allegedly sent explicit photographs to his female colleagues.
On Friday (19 May), the Federal Court ordered AMP Life and AMP Financial Planning to pay a penalty of $24 million in relation to contraventions concerning the deduction and retention of life insurance premiums and advice service fees from the superannuation accounts of deceased customers.
Justice Lisa Hespe described the conduct as “very serious, wrongful behaviour” and said the culture of the AMP Group assumed no systemic issues.
“It resulted in a failure to have a process in place that was capable of identifying, investigating and remediating systemic issues for many years. The failure reflects poorly on the defendants,” she said.
By now AMP knows how to take a beating. The battle-hardened bank is well-accustomed to hefty fines and the lashing tongue of judges. It is a scarred relic of a different era. Whether it has enough tenacity in the tank for a good redemption story remains to be seen.
But even with the best rehabilitation in the world, it’s hard to live down the fact that you knowingly profited from the dead.
if they were paying premiums on Life cover then a policy existed and a lumpsum paid to the beneficiaries. even IP has some small death component, Once the claim was made the extra premiums would have been refunded. did this only impact TPD and trauma?
AMP like others did some stuff that was wrong. However this article looks to be very lazy. Advice fees as others have mentioned are used to assist in winding up the assets and investments the Adviser has recommended and assisted in managing. Simply turning off advice fees was always a dumb idea. While it sounded good in the RC reality is different. The RC was not about improving outcomes it was always about headlines, which is why in the cold light of day many of the ‘recommendations’ are now being recommended to be wound back.
Yes, the estate lawyers don’t like competition
I’m pretty sure these comments will go no where and I despise AMP for what they brought to the life insurance market, BUT I have always felt they were unfairly treated with this incident IF once they knew a client/customer was dead, they stopped taking premiums.
Life insurance companies, advisers and their clients can go months without talking to each other. How would they know a client dead unless told – as previous comments elude to.
If AMP weren’t told the client had died, how the hell would they know to turn off premium deductions? If they backdated and refunded premiums and advice fees post the date of death, then I don’t see what the problem is. You can’t turn a Mac Truck on a 20-cent piece. If [b]they knew[/b][u][/u], and kept taking fees and premiums then THEY DO DESERVE the kick in the arse they got.
Without supporting AMP I’ve had numerous instances where clients have died and I’ve had to turn off ongoing fees. The next of kin are dealing with a lot of emotional trauma and my response has been “I’m no longer getting paid so you need to either agree to a fee for me to assist you or you can deal with the provider yourself”. Those that take the second option usually call two or three times in the next three months crying and stating they aren’t getting anywhere with the product provider. They are again advised I’m not a charity and I’m willing to help them for a fee, which has now increased due to the increased cost of providing advice.
Client service at its best but I’m not a charity and need to provide for my own family. There’s hardly an ideal way to deal with this situation.
The truth is a company never knows that a superannuation client is dead until they are informed by the super fund of heirs. It is only then that the fund or company can stop charging fees or premiums. Any overcharged premiums would then be included as part of the claim. This is how I believe AMP operated and how they couldn’t explain that is beyond me.
How long do we, as a collective, need to carry the can for AMP. Surely we can expect better from the the “Wealth Giant” or better still, revoke it’s AFL and move it on to where it belongs.
I agree with the article. AMP have been a rudderless and hopeless (did I mention arrogant? There, I have now) organisation for more years than I care to mention. They deserve everything they get, and more.
I find it laughable that around 18 months ago, the then Financial Services Minister, Jane Hume, made some comments about AMP during a webinar / seminar with the FAAA (then the FPA). Whilst I can’t recall the exact words, it went something like “It’s important to have AMP within the Australian financial services market”. My immediate question was “Why?”, which was met with stony silence. I wonder if Ms Hume still harbours those same sentiments given the latest penalty of $24m against AMP.
And of course, the government of the day (Liberals), typical filling their collective pants because of the backlash) decided to stamp out charging dead people. Fair enough if it was related to life insurance premiums for dead people, but no, it was stamped out for everything. So when a client passes away, we have to switch off all fees, but continue to provide services to the next of kin. Now some of you out there will say, charge a separate hourly rate for those services. Those hours can really rack up. And so the argument commences about who pays what & when. It’s just so dumb.
What’s wrong with charging dead people for services rendered after death? Lawyers and accountants do it all the time when dealing with deceased estates. Are financial planners so different? It really does beggar belief.
just a question for the virtue signalers who wrote the article – do you believe that AMP had a responsibility to maintain appropriate custody of these funds, do you believe (in the absence of directions to the contrary) that they had authority to keep these monies invested = yes – or should have they dead letter box them to cash? that is acted onthe investments without authority. Do you think it is possible that the winding up of the estate of the deceased is the responsibility of the executor – to act to protect and preserve the assets of any deceased? and if there was – and the executor failed to properly and expeditiously act as an executor to secure those assets – whose fault is that? Its not the investment houses fault – they are still providing treasury functions. This whole shooting match has been one of moral indignation – and for lawyers and judges to be banging on about it as the crux of the issue – speaks more to their own distasteful behaviour in their actions when dealing with deceased estates. and I have seen more than a few doozies for this to be an exception to the rule.
So where is the responsibility for the executor of the estate to identify all assets and liabilities? No mention of where some of the accountability rests, just pile on AMP as though they did it deliberately. Incompetently maybe, but the REAL issues are the dinosaur systems and legacy products. These combine to create the “amazing revelations” from Hayne J. (I still doubt any of those involved in the RC really do, even now, understand financial services.)