A number of Australian life and investment firms face combined penalties totalling AU$34 million following self-reported failings to the regulator.
In the first case, the Federal Court of Australia found four companies that are, or were, part of the AMP Group breached the law when charging life insurance premiums and advice fees from the superannuation accounts of more than 2,000 deceased customers.
On Friday 19 May the court ordered two of these AMP companies to pay a combined penalty of $24 million for the breaches.
Both AMP Life and AMP Financial Planning admitted they 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.
“This misconduct represents a fundamental breach of trust between a customer and their financial services provider,” said the Court.
The AMP Companies are:
- AMP Life Limited, which is now part of the Resolution Life Group, but was part of AMP when the conduct occurred – penalised $18 million
- AMP Financial Planning Proprietary Limited – penalised $6 million
- AMP Superannuation Limited – breaches that did not include a civil penalty
- NM Superannuation Proprietary Limited – breaches that did not include a civil penalty
AMP Life Limited and AMP Financial Planning also accepted insurance premiums and advice fees even though, at the time they received those fees, there were reasonable grounds for believing that they would not be able to supply the insurance or advice.
Justice Hespe noted the systems failures by AMP, saying the lack of oversight and executive management awareness of the issue was part of the problem.
A statement from AMP said the firm identified issues with its processes regarding deceased customer accounts in 2018 and self-reported to the regulator.
AMP Group General Counsel David Cullen states: “We have made significant changes to our systems and processes in recent years designed to prevent this from recurring.”
in the second case, MLC Life Insurance faces a $10 million penalty for misleading customers and failing to provide promised benefits.
The penalty was ordered by Justice Moshinsky on Thursday 18 May at the Federal Court in Melbourne for failing to pay policy holders due to a lack of appropriate systems to administer its products.
In addition to the penalty, MLC Life Insurance has provided approximately $11.8 million in remediation to approximately 1,000 impacted customers.
The insurer has subsequently invested $640 million in a technology upgrade intended to deliver “…more efficient policy administration and to reduce the possibility of a recurrence”.