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AMP cops $24m penalty for unconscionably preying on its own customers

In Australian Securities and Investments Commission v AMP Superannuation Limited [2023] FCA 488, the Federal Court of Australia found that AMP Life Limited and AMP Financial Planning Proprietary Limited (AMP) engaged in unconscionable conduct by deducting and/or failing to properly refund insurance premiums and advice fees respectively from superannuation members after being notified of their deaths.

The Court found that AMP's conduct was unconscionable because it was:

  • Unfair and oppressive;

  • Contrary to reasonable expectations; and

  • Taken advantage of a vulnerable position.

The Court found that AMP's conduct was unfair and oppressive because it involved the continued deduction of premiums and fees from the superannuation accounts of deceased members, even though there was no longer any entitlement to do so. This meant that the members' beneficiaries were deprived of the funds that would have been paid out if the premiums and fees had not been deducted.

The Court found that AMP's conduct was contrary to reasonable expectations because it was not what a reasonable person would have expected a financial services provider to do in the circumstances. A reasonable person would have expected that, once notified of the death of a member, a financial services provider would stop deducting premiums and fees from the member's superannuation account.

The Court found that AMP's conduct took advantage of a vulnerable position because the members who were affected by the conduct were deceased and their beneficiaries were often unaware that the premiums and fees were still being deducted. This meant that the members and their beneficiaries were in a weak position to challenge AMP's conduct.

The Court ordered AMP to pay a total pecuniary penalty of $24 million. This was the largest pecuniary penalty ever imposed by the Federal Court for unconscionable conduct.

The AMP case is a significant case because it sets a precedent for future cases involving unconscionable conduct by financial services providers. The case also highlights the importance of financial services providers having robust systems in place to ensure that they do not continue to charge premiums and fees from the superannuation accounts of deceased members.

In addition to the pecuniary penalty, the Court also made a number of other orders, including:

  • An order that AMP implement a number of measures to improve its systems and procedures for dealing with deceased members;

  • An order that AMP publish a statement on its website acknowledging its conduct and apologizing to its customers; and

  • An order that AMP pay the costs of ASIC's legal fees.

The AMP case is a reminder that financial services providers have a duty to act fairly and honestly towards their customers. When a financial services provider fails to meet this duty, it may be liable for unconscionable conduct.


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