An Australian court has found AMP liable for “very serious, wrongful behaviour” in charging insurance and advice fees to dead clients, fining two companies in the group a collective A$24 million.
The fines add to a growing legal bill for the ASX-listed business as courts and regulators mop-up historical breaches, many emanating from the 2019 Australian Royal Commission into financial services.
AMP has already paid compensation of about A$700 million to remedy fees-for-no-service misconduct but Australian Securities and Investments Commission (ASIC) has also been pursuing the firm – and other institutions – through the legal system on various charges.
In the Federal Court decision handed down last week, Justice Hespe found four entities in the group had breached the law in charging dead clients with two – AMP Life (now part of Resolution Life) and AMP Financial Planning – copping fines of A$18 million and A$6 million, respectively.
ASIC deputy chair, Sarah Court, said in the statement: “The AMP companies had been notified that these customers had died, and despite this, continued to charge premiums and fees on their super accounts.”
The AMP entities collected about A$1 million in insurance and advice fees from more than 2,000 dead clients over a four-year period ending in August 2019.
Hespe said the “very serious, wrongful behaviour” also reflected poor governance systems across the AMP group at the time.
“The lack of oversight and executive management awareness of the issue was part of the problem,” the judge 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.”
David Cullen, AMP group counsel, said in a statement that this “historical matter is not reflective of the AMP we are today”.
“AMP apologises to all beneficiaries affected by this matter,” Cullen said, noting the group had made efforts to remediate clients since self-reporting the breaches to ASIC in 2018.
“We have made significant changes to our systems and processes in recent years designed to prevent this from recurring.”
AMP “fully provisioned” the A$24 million fine in its 2022 accounts.
As at March this year, six Australia financial institutions, including AMP, had forked out A$4.7 billion in compensation relating to poor financial advice practices alone.