The Australian Securities and Investments Commission (ASIC) has begun legal proceedings against five subsidiaries of financial giant AMP (ASX:AMP)
in the Federal Court of Australia, accusing the businesses of “unconscionable conduct” regarding deceased customers.
The corporate watchdog alleged that AMP wrongfully charged deceased customers financial advice and life insurance fees, despite having received notifications of their passing.
ASIC scrutinised AMP’s financial advice and insurance operations and detected breaches of financial services’ responsibilities between May 2015 to August 2019.
The regulator of the financial sector claims that AMP had deducted half a million dollars worth of life insurance premiums from superannuation funds of 2000 deceased individuals. ASIC’s findings also revealed that 27 customers continued to pay a total of $100,000 for financial advice services, after they were declared dead.
ASIC identified AMP’s failure to update their systems to prevent the compliance mishaps represented violations of obligations stipulated under the company’s Australian Financial Services License to “efficiently, honestly and fairly” conduct business. The authority is now seeking pecuniary and regulatory and penalties for the plaintiff.
AMP has confirmed awareness of the lawsuit and mentioned the company’s efforts of compensating relevant customers and their beneficiaries.
AMP responded to the legal action “AMP has taken this matter very seriously and we will now carefully consider the allegations raised by ASIC. We have been assisting ASIC with its investigation and will continue to engage constructively as part of the legal process”.
The $3.7 billion company’s remediation project has so far disbursed $5.3 million in total compensation to over 10,000 affected individuals.
Shares in AMP (ASX:AMP)
are trading almost 4 per cent higher at $1.11