AMP sued for allegedly charging life insurance premiums to dead customers

AMP sued for allegedly charging life insurance premiums to dead customers

The Australian Securities and Investments Commission (ASIC) is seeking pecuniary penalties against five AMP (ASX: AMP) subsidiaries for allegedly charging life insurance premiums and advice fees to more than 2,000 deceased customers despite being notified of their deaths.

ASIC has commenced civil penalty proceedings in the Federal Court alleging AMP companies' conduct showed a pattern of behaviour that was, in all the circumstances, unconscionable.

The corporate watchdog alleges 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.

Additionally, it is alleged the AMP companies received more than $100,000 in advice fees from deceased customer accounts, with at least $75,000 being charged in the aforementioned timeframe.

ASIC is seeking declarations from the Federal Court in penalties, alleging that in that May 2015 to August 2019 period each of the AMP companies in the case did one or more of the following:

  • deducted life insurance premiums from 2,069 deceased customers' superannuation accounts despite being notified that the customer had died;
  • deducted financial advice fees from deceased customers' superannuation accounts despite being notified that the customer had died;
  • failed to ensure that a system was in place that ensured that it did not charge deceased customers;
  • 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; and
  • contravened their overarching obligations as Australian financial services licensees to act efficiently, honestly and fairly.

The AMP companies concerned are AMP Superannuation Limited, NM Superannuation Proprietary Limited, AMP Life Limited (now part of Resolution Life NZ), AMP Financial Planning Proprietary Limited and AMP Services Limited.

Throughout 2019 and 2020, AMP conducted a remediation program in which more than $5 million was repaid to the estates or representatives of deceased customers - including those the subject of ASIC's case - for wrongfully charging premiums and advice fees to more than 10,000 superannuation accounts.

This remediation was highlighted in a response from AMP today acknowledging the proceedings, clarifying it had self-reported to the regulator and that the matter was covered in the financial services Royal Commission.

AMP stated the remediation was completed in May 2020.

"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.

"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 Royal Commission also revealed fees-for-no-service (FFNS) issues at National Australia Bank (ASX: NAB) and Commonwealth Bank (ASX: CBA), which also included fees charged to deceased customers.

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