The five companies that are, or were, part of the AMP Limited group that are set to be subject to the civil penalty proceedings – filed in the Federal Court of Australia – are AMP Superannuation Limited, NM Superannuation Proprietary Limited, AMP Life Limited (now owned by Resolution Life NZ, “but was part of AMP when the conduct occurred”, according to ASIC), AMP Financial Planning Proprietary Limited and AMP Services Limited.
The watchdog is claiming that these companies received over half a million dollars in insurance premiums and over $100,000 in advice fees from super accounts of customers who had passed away, most of which came in the period between May 2019 and August 2019.
ASIC will be alleging that, from May 2019 to August 2019, the aforementioned AMP companies did one or more of the following: deduct life insurance premiums from 2,069 deceased customers’ super accounts, despite being notified of those customers’ deaths, and deducted financial advice fees from deceased customers’ super accounts despite being notified of those customers’ deaths.
It will also be alleged that there was failure to ensure that a system existed to make sure that deceased customers were not charged, that a system existed to manage conflicts of interest between the companies’ interests in continuing to charge premiums and advice fees and members’ interests in premiums and advice fees ceasing after death, and that there was a contravention of AFSL licensee obligations to act efficiently, honestly and fairly.
Moreover, ASIC noted, it will allege that the conduct of the AMP companies “demonstrated a system of conduct or pattern of behaviour that was, in all the circumstances, unconscionable”.
The watchdog will be seeking declarations of contraventions of the ASIC Act and Corporations Act, as well as pecuniary penalties, from the Federal Court.
Proceedings are being launched, ASIC said in a statement, “proceeding because licenced financial services companies need to have robust compliance systems to ensure they meet their legal obligations to customers”.
“Customers, and their beneficiaries, should have confidence that they will be correctly and lawfully charged for any financial services or products,” the watchdog proclaimed.
In a statement issued on the morning of 27 May, AMP acknowledged the civil proceedings against it. The banking giant said it had identified issues with its processes regarding deceased customer accounts in 2018 and self-reported to the regulator at that time. Moreover, it said it has taken action to change its processes and policies to address those issues and “has remediated all impacted customer accounts”.
In total, AMP said, it remediated 10,155 customer accounts a total of $5.3 million, including compensation for lost earnings.
AMP Group general counsel David Cullen said that AMP is taking the matter “very seriously” and will be carefully considering the allegations raised by the corporate watchdog.
“We have been assisting ASIC with its investigation and will continue to engage constructively as part of the legal process,” he said.
“When we discovered the issues, we immediately moved to change our processes and systems and took action to ensure the beneficiaries of customers impacted were fully remediated. AMP apologises to all customers and beneficiaries who were impacted by this matter.”
Listing for a case management hearing has not yet occurred.
Around $700M in fees for no service and ASIC take up a piffling case worth around $600k?
we now have a regulator just hell bent on revenge.
I hate AMP but this is a waste of time
Firstly, charging of fees for deceased estates is usually an incidental issue, particularly when the fund administrator is unaware of the owner’s passing. There are numerous occasions where a fund administrator becomes notified after a significant amount of time. This is usually due to the estate being unaware of investments or insurance policies owned by the deceased. Nonetheless, administration of deceased estates are extremely time consuming and require additional adviser input to assist executor/s, solicitors, fund managers etc.. In the meantime, we are still managing the client’s investment portfolio to fulfill our obligation, let alone communicating with the family members of the deceased. I have had numerous cases that have taken longer than 12 months to finalise. And in most cases, the widow retains my service for ongoing management of fund investments.
Thus, will the next introduced legislation require that advisers cease all management activities of a deceased estate?
If so, who becomes responsible for numerous potential issues?
This is an industry issue, and not simply limited to AMP.
My understanding is that we are required to get the executor or administrator to sign off on our fees…
Yes, just had a good client die – appointment with executors booked – waiting with TOE before I tell them a thing. Nothing much to do in this case so all easy.
Solicitor will as usual provide Financial Product Advise when advising the sale of all financial investments with zero regard for tax etc. Nothing to see move along.
AMP actions Step 1) – issue press release saying it’s not us it’s those dodgy financial planners, they were getting the advice fees….2) ring up FPA and get them to issue press release saying we need higher education standards…step 3) all is good. crisis adverted.
Its a bold headline for ASIC Unconscionable Conduct they say. But why? AMP are still managing the money. Any adviser who has managed an estate will know there is a lot more work than we get paid so why are adviser fees unconscionable? ASIC announcements are headline grabbing justification to the Govt for their role as adviser watchdogs. Im just saying!
They were doing this even in 1998 – 23 years at least
I look forward to funding this lawsuit through the adviser levy, yay more court action 😥
At least AMP is paying for this litigation itself as it pays part of the ASIC levy.
Nope…AMP will likely be out of financial planning – and those that remain will be picking up the cost…
Tip of the icegerg
ASIC and anyone else who has a claim against AMP better get in quick because the last lifeboats are being launched and its sinking fast!
Was planning on staying but now thinking it’s better if I am out of this industry before the next regulatory levy is due….
Good call..got me thinking about that now. Crikey…:cry:
So you are worried because of a crackdown on charging fees for no service? Please, leave now and spare the industry your poor conduct.
Next ASIC will be suing AMP for spelling mistakes as they seek to spend $500k to recover $1,000.
What took them so long?
It is mind boggling that an institution can have systematic failure of this magnitude.
not really? Its really not.
$600,000! Lol! What about the $800,000,000 stolen from the advisers. Where are your priorities ASIC? This is an ASIC marketing venture and a gold mine for the lawyers. However, AMP, you are in a death spiral and are now paying for your poor decisions.
NO PR pictures in helping advisers