Australian regulator to sue AMP over charging dead customers

ASIC is to sue AMP over charging dead customers. Photo / 123RF

The Australian regulator is taking legal action against five companies associated with AMP over allegations the entities were involved in charging premiums and fees to more than 2000 deceased customers.

The issue first came to light as part of the Australian Royal Commission into the misconduct of financial services firms held in 2018.

AMP has already paid out more than A$5 million ($5.3m) in remediation to the estates or representatives of the deceased customers for wrongfully charging premiums and advice fees to more than 10,000 superannuation accounts.

But in a statement ASIC today said it had commenced civil penalty proceedings in the Australian Federal Court against AMP Superannuation, NM Superannuation Propriety, AMP Life which has since been sold to Resolution Life NZ, AMP Financial Planning Propriety and AMP Services.

The regulator alleges that from May 2015 to August 2019, each of the AMP companies deducted life insurance premiums from 2069 deceased customers' superannuation accounts despite being notified that the customer had died and or failed to ensure that a system was in place to manage conflicts of interest between the AMP companies' interests in continuing to charge premiums and advice fees and members' interests in premiums and advice fees ceasing after death.

It is also alleged the companies contravened their overarching obligations as Australian financial services licensees to act efficiently, honestly and fairly and the AMP companies' conduct demonstrated a system of conduct or pattern of behaviour that was, in all the circumstances, unconscionable.

ASIC alleges that the AMP companies received more than A$500,000 in insurance premiums from the superannuation accounts of deceased customers, with at least A$350,000 charged between May 2015 and August 2019.

On top of that it is alleged that the AMP companies received more than A$100,000 in advice fees from deceased customer accounts, with at least A$75,000 being charged between May 2015 and August 2019.

"ASIC seeks declarations of contraventions of the ASIC Act and Corporations Act. ASIC is also seeking pecuniary penalties and other orders to be made by the Federal Court.

"ASIC commenced this proceeding because licensed 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."

In statement to the stock exchange dual ASX and NZX listed AMP acknowledged the civil proceedings brought by ASIC.

It said AMP identified issues with its processes in 2018 regarding deceased customer accounts and self reported to the regulator and it had taken action to change its processes and policies to address these issues and had remediated 10,155 customer accounts a sum of A$5.3m.

AMP group general counsel David Cullen said AMP had taken the matter very seriously and it would now carefully consider the allegations raised by ASIC.

"We have been assisting ASIC with its investigation and will continue to engage constructively as part of the legal process.

"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."

The date for a hearing has yet to be set.