Four companies that are part or were part of AMP Group breached the law when they charged more than 2,000 deceased customers life insurance premiums and advice fees from the superannuation accounts, the Federal Court found.
Two of the companies, AMP Life (now a part of Resolution Life Group that was under AMP when the conduct occurred) and AMP Financial Planning, had to pay $18m and $6m, respectively, after admitting to engaging in the “unconscionable conduct by deducting and/or failing to properly refund insurance premiums and advice fees respectively from superannuation members after being notified of their deaths.”
They also admitted to accepting insurance premiums and advice fees even though, at the time they received those fees, there were reasonable grounds for believing that they would not be able to provide the insurance or advice.
All four AMP companies, which included AMP Superannuation and NM Superannuation Proprietary, were also found to have contravened their overarching obligations as Australian financial services licensees to act efficiently, honestly, and fairly.
ASIC Deputy Chair Sarah Court said the AMP companies had been notified that the customers had died, and despite this, continued to charge premiums and fees on their super accounts.
“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,” Court said.
She said the misconduct “represents a fundamental breach of trust between a customer and their financial services provider.”
Corporate watchdog ASIC said the AMP companies received more $500,000 in insurance premiums from the superannuation accounts of deceased customers, with at least $350,000 charged between May 2015 and August 2019. The companies 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.
In handing down her decision, Justice Lisa Hespe described the conduct as “very serious, wrongful behaviour,” noting “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.
She further noted the systems failures by AMP, saying, “The lack of oversight and executive management awareness of the issue was part of the problem. 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. The failure reflects poorly on the defendants.”
“AMP apologises to all beneficiaries of those affected by this matter,” said David Cullen, AMP Group general counsel. “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.”
