ASIC sues AMP firms for fees-for-no-service
The corporate regulator has taken six companies that are, or were, part of AMP Limited to the Federal Court after charging $600,000 in fees-for-no-service on corporate superannuation accounts.
The Australian Securities and Investments Commission (ASIC) alleged that the companies charged advice fees to over 1,500 customers despite knowing the customers were no longer able to access the relevant advice.
ASIC said it sought declarations, pecuniary penalties and adverse publicity orders to be made by the Federal Court.
ASIC further alleged that from July, 2015, to April, 2019, the AMP companies:
- Deducted financial advice fees from 1,540 customers’ superannuation accounts despite being aware that the customer had left their employer-sponsored superannuation account and therefore could not access the advice for which those fees were paid;
- Failed to ensure that a system was in place 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 six AMP companies were:
- AMP Superannuation Limited;
- AMP Life Limited, which is now owned by Resolution Life NZ, but was part of AMP when the conduct occurred;
- AMP Financial Planning Proprietary Limited;
- AMP Services Limited;
- Charter Financial Planning Limited; and
- Hillross Financial Services Limited.
ASIC noted this followed proceedings by ASIC against AMP companies that allegedly charged life insurance premiums and advice fees to over 2,000 customers despite being notified of their death.
In an announcement to the Australian Securities Exchange (ASX), AMP said it acknowledged the civil proceedings by ASIC concerning the “historic charging of Plan Service Fees”.
“In 2018, AMP became aware that some AMP Flexible Super members continued to be charged a Plan Service Fee after delinking from their corporate super plan into a retail account. Amp took action to rectify the issue, self-reported it to ASIC, and commenced a remediation process,” it said.
“The remediation was completed in November 2019, with approximately 2,500 customers being remediated a total sum of approximately $900,000 covering fees charged and lost earnings.”
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
