Australia’s AMP fined $16 million for charging fees to deceased clients

11:17 pm Thursday, May 18th, 2023

(Reuters) -Troubled Australian wealth manager AMP Ltd will pay a court-mandated penalty of A$24 million ($16.3 million) for billing dead clients for insurance and financial advice, effectively drawing the curtains to a scandalous saga dating back to 2018.

The allegations first came to light when a public inquiry exposed systemic wrongdoing at the company, including charging fees for advice that was never given, taking insurance premiums from the accounts of dead clients and conspiring at the board level to deceive regulators.

These revelations rocked the firm – leading to the exit of its chairperson and CEO, clients fleeing in troves and the company’s market value shrinking.

The Federal Court has found four companies that are or were part of the AMP Group in breach of the law when charging life insurance premiums and advice fees from the superannuation accounts of more than 2,000 deceased customers, the country’s corporate regulator Australian Securities and Investments Commission (ASIC) said on Friday.

Two of these companies – AMP Life and AMP Financial Planning were ordered to pay a combined penalty of $24 million for the breaches.

“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,” said ASIC Deputy Chair Sarah Court.

“This misconduct represents a fundamental breach of trust between a customer and their financial services provider.”

The penalty handed down was fully provisioned for by the company in its financial statements for the year ended Dec. 31, 2022. Shares of the firm were up 0.7% at A$1.0875.

“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.

($1 = 1.4743 Australian dollars)

(Reporting by Harish Sridharan and Riya Sharma in Bengaluru; Editing by Uttaresh Venkateshwaran and Dhanya Ann Thoppil)