AMP is being sued by the corporate regulator for allegedly charging thousands of dead people for insurance and financial advice despite being notified they had died, a damning revelation first aired in the banking royal commission.
The Australian Securities and Investments Commission announced on Thursday morning it has filed a lawsuit in the Federal Court against five AMP-owned companies related to “unconscionable” practices occurring from May 2015 to August 2019.
The regulator alleges AMP collected more than $500,000 in life insurance premiums from more than 2000 dead customers’ superannuation accounts, and $100,000 in financial advice fees from 27 dead customers.
ASIC is taking AMP to court over charging dead customers for life insurance and financial advice. Credit:Arsineh Houspian
ASIC claims AMP had failed to ensure the correct system was in place to ensure dead customers were not being charged fees and failed to manage conflicts of interests between the company and its advisers.
“ASIC further alleges that the AMP companies’ conduct demonstrated a system of conduct or pattern of behaviour that was, in all the circumstances, unconscionable,” it said.
The regulator alleges AMP breached obligations under its Australian Financial Services License to act “efficiently, honestly and fairly” and is seeking fines, among other orders from the 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,” the regulator said in a statement.
The fees for no service scandal was first aired in the banking royal commission during 2018, where it emerged AMP had charged thousands of dead customers for life insurance, despite knowing there had been no life to insure.
In its originating statement, ASIC said prior to August 2019, AMP had no policy or system in place to prevent or monitor deductions from the accounts of customers who had died.
AMP acknowledged the civil proceedings in a statement with the ASX, claiming the issue was covered in the royal commission and AMP had subsequently completed a remediation program to compensate more than 10,000 customers a total sum of $5.3 million, which included compensation for lost earnings.
“AMP has taken this matter very seriously and we will 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,” AMP group general counsel David Cullen said in a statement.
“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 proceedings are filed against AMP trustees – AMP Super and NM Super, AMP Financial Planning, AMP Life and AMP Services.
AMP is also the subject of a shareholder class action related to losses sustained during the banking royal commission.
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