Judge slams company for ignoring fees-for-no-service issue for years
AMP has been slapped with a $14.5 million fine and slammed by a judge for “extremely serious” failings after it was found to have wrongly charged customers despite the issue being pointed out repeatedly across many years.
AMP was hit with the fine, which is more than triple the amount it proposed, in Federal Court Tuesday for charging thousands of customers for advice they didn’t receive, The Australian reported.
The issue related to superannuation accounts held by employees who used AMP to manage them. Those people were charged by the company for access to general financial advice between AMP and their employer, The Australian reported.
AMP was found to have charged $356,188 in fees to staff who had left their jobs and were no longer able to access the advice.
Federal Court Justice Mark Moshinsky ruled that AMP wrongly charged 1,452 superannuation members between 2015 and 2019 – but the company had been aware of the issue as early as 2009. The court ruled that AMP has violated the requirements of its Australian Financial Services Licence to operate efficiently, honestly and fairly and to comply with financial services laws, The Australian reported.
Moshinsky said that AMP’s failure to investigate the fees-for-no-service issue, despite being made aware of it, “reflects very poorly” on the company’s corporate culture.
“While it is not suggested that senior management were involved in the contraventions, in my opinion it reflects very poorly on the organisational culture that this type of questioning did not occur,” he said.
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The judge also slammed AMP’s failure to reveal how the issue began and why it wasn’t caught sooner.
“The absence of such material makes it difficult to be satisfied that the defendants have fully understood what went wrong here, so as to ensure that this type of loss does not occur again,” he said.
The Australian Securities and Investments Commission has proposed a $17.5 million penalty for the misconduct, while AMP proposed a $4.6 million fine. The final judgement of $14.5 million won’t cut into the company’s bottom line, as it provisioned for the loss in its first-half results, The Australian reported.
