The corporate regulator has commenced civil proceedings against five AMP companies for continuing to charge deceased clients for services between May 2015 to August 2019, describing the wealth management giant’s conduct as ‘unconscionable’ in a filing to the federal court.

ASIC alleges AMP Superannuation, NM Superannuation, AMP Life (since sold to Resolution Life Group), AMP Financial Planning and AMP Services had a hand in charging life insurance premiums and financial advice fees to clients they knew had died, failing to have appropriate systems in place and contravening their obligation to act “efficiently, honestly and fairly”.

“ASIC further alleges that the AMP companies’ conduct demonstrated a system of conduct or pattern of behaviour that was, in all the circumstances, unconscionable,” the regulator stated.

While AMP had already begin its remediation project associated with crimes brought to light at the Hayne Royal Commission, ASIC says the offences continued up until August 2019, six months after the commission’s final report was delivered and roughly 12 months after the inquiry concluded.

AMP reportedly collected over $100,000 in financial advice fees from 27 deceased customers and $500,000 in life insurance premiums from more than 2,000 deceased customers in the period.

As part of the charges, ASIC alleges AMP Financial Planning accepted advice fees “when there were no reasonable grounds for believing that [AMP FP advisers] would be able to supply services in the nature of personal advice, at any time or at all”.

“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 stated.

In a concise statement lodged to the federal court outlining the allegations against AMP’s largest advice group, ASIC said: “The deceased member had died. There was no longer any personal advice to provide.”

Mea Culpa

AMP acknowledge the charges in a statement released 12 minutes after the ASIC announcement, saying it identified issues with its processes in 2018 and self-reported to the regulator before the issue was covered in the royal commission.

“AMP has taken action to change its processes and policies to address these issues and has remediated all impacted customer accounts,” the institution stated, adding that its remediation program paid $5.3 million to 10,155 affected clients for the period 2011 to 2019. The remediation was completed in May this year.

AMP group general counsel, David Cullen, commented that AMP was taking the matter seriously and would “engage constructively” with ASIC.

“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,” Cullen stated. “AMP apologises to all customers and beneficiaries who were impacted by this matter.”

Refresh at the top

AMP has undergone a major executive reshuffle in an effort to reset the brand and its culture in the wake of the royal commission, headed by the appointment of ANZ deputy chief officer Alexis George as chief executive in place of Francesco de Ferrari.

George is due to take the reigns at AMP on July 1.

AMP also refreshed its board in late 2020, with Debra Hazleton taking over as chair after the resignation of David Murray.

On the advice side, ex-Sunsuper CEO Scott Hartley took the reigns of AMP Australia’s banking and wealth divisions in January this year and immediately started discussing future business models with AMP-licensed advisers.

Hartley subsequently brought in industry stalwart Matt Lawler to run the group’s advice division, hailing the “energy and passion” of the ex-Yellow Brick Road and Wealth Market chief executive.

AMP is in the middle of drastically reducing its adviser workforce; the group has less than 1,500 advisers now after losing over 500 in the last year. AMP had over 3,000 advisers as recently as 2016.

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