AMP sued by ASIC over fees for no service

ASIC is seeking civil penalties, alleging AMP companies wrongly charged over $600,000 in advice fees on corporate super accounts.

AMP is accused of charging advice fees on corporate super accounts when it knew customers were no longer able to access the relevant advice.

ASIC has launched civil action against AMP in the Federal Court, alleging the financial services group charged fees for no service to more than 1500 superannuation customers.

The corporate watchdog alleges six former or current AMP companies were involved in the latest “fees for no service” claim, receiving more than $600,000 in advice fees from affected customer accounts.

In a concise statement filed in the Federal Court, ASIC alleges that between July 2015 and April 2019 the AMP companies deducted fees from 1540 customers’ superannuation accounts despite knowing they had left their employer-sponsored superannuation account.

Further, it says the group failed to ensure a system that did not charge customers who had left their employer-sponsored account, and contravened their obligations as Australian financial services licensees to act efficiently, honestly and fairly.

The fresh claims come just two weeks after ASIC scrapped its criminal investigation into AMP over the royal commission’s “fees for no service” revelations, following consultation with the Commonwealth Director of Public Prosecutions.

AMP has repaid more than $153m to customers in relation to fees-for-no-service conduct in recent years, and is already facing court over allegedly charging life insurance premiums and advice fees to more than 2000 customers despite being told of their death.

In its latest civil action, ASIC is seeking declarations, pecuniary penalties and adverse publicity orders to be made by the Federal Court.

The six AMP companies involved are AMP Superannuation Limited; AMP Life Limited, which is now owned by Resolution Life Group; AMP Financial Planning; AMP Services; Charter Financial Planning; and Hillross Financial Services.

According to the concise statement, “Plan Services Fees” (PSF) were deducted each month from the employer-sponsored superannuation accounts of AMP’s customers, for general advice provided by authorised representatives of advice licensees AMP Financial Planning, Hillross and Charter Financial Planning.

AMP Life was the administrator of AMP Superannuation’s products, while AMP Services provided AMP Life and AMP Superannuation with the personnel, systems and resources required to administer the superannuation products.

AMP Life deducted the PSF from members’ accounts and remitted it to the advice licensees, who retained a portion of the fees and remitted the balance to the authorised representatives providing the advice.

ASIC claims that AMP Life continued to deduct fees from customer accounts, despite knowing the affected customers had ceased employment with their relevant employer and having already transferred them from an employer-sponsored account to a retail account.

“The advice licensees accepted payment for financial services in circumstances where there were reasonable grounds for believing that each of them would not be able to supply the financial services within a specified period, or at all,” ASIC’s concise statement says.

“Each of AMP Superannuation, AMP Life and AMP Services knew of the continued deduction of PSF.

“By their internal policies, procedures, controls, human resources and information technology systems, each of these entities continued to facilitate, and failed to take any, or alternatively any adequate, steps to prevent the ongoing deduction of PSF from each affected member’s account on cessation of employment.”

AMP on Friday told the ASX it became aware in 2018 that some super members continued to be charged fees after moving from a corporate superannuation plan into a retail account.

“AMP took action to rectify the issue, self-reported it to ASIC, and commenced a remediation process. The remediation was completed in November 2019, with approximately 2500 customers being remediated a total sum of approximately $900,000 covering fees charged and lost earnings.”

Originally published as AMP sued by ASIC over fees for no service