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ASIC suing AMP for charging deceased customers
The corporate watchdog is launching civil proceedings against five companies associated with the AMP Limited group for allegedly charging life insurance premiums and advice fees to thousands of customers whose deaths the banking giant had been notified of.
Jerome Doraisamy
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.
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.
EDITOR’S NOTE: This story was updated to include AMP’s response.
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly and HR Leader. He has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. In June 2024, he also assumed the editorship of HR Leader. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of the Minds Count Foundation.
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