AMP remediation sees over 25,000 refunds unclaimed

In a response to questions on notice from the House economics committee, AMP revealed that over the course of 2019 and 2020, it had set up more than 42,000 eligible rollover funds (ERFs) in the name of clients that had were owed remediation funds from the institution.

AMP said as of 30 June 2020, around 17,000 of the affected clients had transferred their remediation funds out of the ERF and into their preferred super fund, leaving around 25,000 of the funds still unclaimed.

The group came under fire at a House economics committee hearing in July, where it was revealed that the ERF products used to refund client money had underperformed their peers by more than 40 per cent over a 10-year period.

At the time, AMP chief executive Francesco De Ferrari said a like-for-like comparison could not be made with the fund and that the institution had had no other option when it could not locate the relevant client to distribute the refund.

“Our ERF is unique in the industry because it is a capital guaranteed product – it doesn’t charge entry, exit or switch fees and it works on a crediting rate, which means the [AMP] Life board would decide a crediting rate that is provided net of fees to the client,” Mr De Ferrari said. 

“You need to compare it to a cash equivalent – a client [in cash] would get CPI, which is 2.1 per cent, or if you keep cash in the bank the equivalent is 1 per cent. 

“We felt the spirit of the law was to reunite the money as quickly as possible with a client’s super account and not take any risks with a client who we can’t find and who we don’t know.”

AMP noted in its response to the committee that just 240 of the remediation accounts created for clients had been related to fees for no service.

In further responses around its dispute resolution processes, the group noted it had received 81 complaints through internal dispute resolution in the 2020 year to date, while six complaints had gone to AFCA, with two of these having been resolved.

“Themes of these complaints include appropriateness of the advice, fees for service and the remediation process,” AMP said.