The federal court hit five companies that are, or were, part of AMP Limited (AMP) with a $14.5 million penalty for charging fees to superannuation members without providing service.
According to the Australian Securities & Investments Commission (ASIC), the court found that 1,452 AMP superannuation members had been paying fees to access general financial advice as part of an agreement between their employers and AMP. Upon leaving their employers, the members lost access to the service, but were automatically charged the advice fee continuously.
The five AMP companies involved in the case are:
The court found that between July 2015 and September 2018, the AMP companies deducted a total of $356,188 in fees. They later admitted to the court that they were aware the members had ceased their employment and could no longer access the advice service.
Although AMP has remediated $691,032 to affected members, the court ruled that the company failed to investigate the possibility of a systematic issue, despite receiving many complaints for a long time.
In handing down his decision, Justice Moshinsky emphasised that AMP's conduct was grave and systemic, leading to contraventions that repeatedly occurred over an extended period.
He added: “In relation to ‘corporate culture,’ I consider that the failure to investigate whether or not there was a systemic issue, despite many complaints, over a lengthy period of time, reflects very poorly on the defendants (in particular, AMP Life).”
ASIC Deputy Chair Sarah Court commented: “AMP was aware it was charging fees for no service to these members, but did not take the proper steps to prevent it from continuing. AMP admitted liability regarding these failures and admitted it did not have the proper systems and compliance arrangements in place to ensure the payments ceased when members left their employer.”
The Court warned superannuation trustees to treat the penalty as a reminder to maintain robust internal governance and assurance arrangements.
“Trustees are responsible for ensuring they only deduct fees from member accounts for services actually provided. If they fail in this obligation, they could face significant penalties,” she added.
The court also ordered AMP to publish an adverse publicity notice on its websites for one year. Meanwhile, another financial advice and superannuation provider was recently hit with a hefty fine after some of its representatives “failed to act in their clients' best interests.”
