Yahoo Finance AMP to pay $24 million for ‘charging dead customers’
The federal court found AMP continued to charge the customers fees despite being notified they had died.
AMP will have to pay a whopping $24 million after the federal court determined it had continued to charge dead customers fees, despite being notified they were deceased.
The court found four companies that are or were part of AMP Group breached the law when it charged life insurance premiums and advice fees from the superannuation accounts of more than 2,000 deceased customers.
The court ordered two of the AMP companies to pay a combined penalty of $24 million for the breaches.
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“The AMP companies had been notified that these customers had died and, despite this, continued to charge premiums and fees on their super accounts,” ASIC deputy chair Sarah Court said.
“Customers and their beneficiaries expect financial-services providers to have the proper systems in place to ensure, once notified, deceased customers are no longer charged. These systems were inadequate, and customers were let down.”
Both AMP Life and AMP Financial Planning admitted they engaged in “unconscionable conduct” by deducting and/or failing to properly refund insurance premiums and advice fees respectively from superannuation members after being notified of the customer deaths.
“This misconduct represents a fundamental breach of trust between a customer and their financial-services provider,” Court said.
AMP made more than $600,000 from dead customers
The AMP companies received more than $500,000 in insurance premiums from the superannuation accounts of deceased customers, with at least $350,000 charged between May 2015 and August 2019.
AMP also received more than $100,000 in advice fees from deceased customer accounts, with at least $75,000 being charged between May 2015 and August 2019.
AMP slammed for ‘very wrong’ behaviour
In handing down her decision, Justice Hespe described the conduct as “very serious, wrongful behaviour”, and said “the deceased members affected were vulnerable, obviously unable to monitor their accounts and were entirely reliant on the representatives of their estates”.
“The beneficiaries of those estates involved individuals who may be expected to have been emotionally vulnerable and unlikely to be familiar with the terms of a policy not issued to them or on their behalf,” Hespe said.
The AMP Companies involved were:
AMP Life Limited, which is now part of the Resolution Life Group, but was part of AMP when the conduct occurred – penalised $18 million
AMP Financial Planning Proprietary Limited – penalised $6 million
AMP Superannuation Limited – breaches that did not include a civil penalty
NM Superannuation Proprietary Limited – breaches that did not include a civil penalty
AMP apologises to customers
AMP said it identified issues with its processes regarding dead customer accounts and self-reported to the regulator.
The bank said it took action to remediate 10,155 customer accounts to the sum of around $5.2 million for the period from 2011 to 2019, which included compensation for lost earnings. The remediation was completed in May 2020.
"AMP apologises to all beneficiaries of those affected by this matter. When we identified the issue in 2018, we reported it to the regulator and worked hard to remediate the estates of affected customers as promptly as possible," AMP Group general counsel David Cullen said.
“We have made strong progress in becoming a customer-focused and purpose-led organisation, and this historical matter is not reflective of the AMP we are today.
"We have made significant changes to our systems and processes in recent years designed to prevent this from recurring. We engaged constructively with ASIC throughout the legal process, and we acknowledge today’s judgment and the conclusion of the matter.”
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