Four companies have “breached customers’ trust” and have been fined $24 million after they were found to have been charging dead members for years, with their systems being slammed as “inadequate”.
The Federal Court found four companies which were a part of the AMP Group breached the law when charging life insurance premiums and advice fees from superannuation accounts belonging to more than 2000 dead customers.
The court found all four AMP companies contravened their obligations as Australian financial service licensees to act efficiently, honestly and fairly.
In handing down the decision, Justice Lisa Hespe described the conduct as “very serious, wrongful behaviour”.
“The deceased members affected were vulnerable, obviously unable to monitor their accounts and were entirely reliant on the representatives of their estates,” she said.
AMP has been fined for breaching customers’ trust. Picture: NCA NewsWire / Steven Saphore
“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.”
Justice Hespe said AMP had a “lack of oversight and executive management awareness”, with the group assuming no systemic issues.
This resulted in a failure to have a process in place which was “capable of identifying, investigating and remediating systemic issues for many years” the judge said.
“The failure reflects poorly on the Defendants,” Justice Hespe said.
AMP Life Limited, which is now part of the Resolution Life Group, was penalised $18 million.
The Federal Court fined AMP Financial Planning Proprietary Limited $6 million.
Meanwhile, AMP Superannuation Limited and NM Superannuation Proprietary Limited did not receive civil penalties.
Deputy Chair of ASIC, Sarah Court, said AMP had been notified the customers had died, but continued to charge premiums and fees on the 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,” Ms Court said.
The company was found to have let customers down.
“These systems were inadequate and customers were let down.”
Both AMP Life Limited and AMP Financial Planning admitted they engaged in unconscionable conduct by deducting or failing to properly refund insurance premiums and advice fees after being advised of members’ deaths.
“This misconduct represents a fundamental breach of trust between a customer and their financial services provider,” Ms Court said.
The Federal Court found the four companies received more than $500,000 in insurance premiums on dead customers’ accounts, with more than half charged between May 2015 and August 2019.
The AMP companies were also found to have received more than $100,000 in advice fees from deceased customers, with more than $75,000 charged in that same period.
AMP Life Limited and AMP Financial Planning admitted they had accepted insurance premiums and advice fees even though there were reasonable grounds for believing they would not be able to supply insurance.