Financial giant AMP has been hit with a $14.6 million fine for charging fees to its customers – and doing nothing to earn them.
It was the result of a case in the Federal Court, launched by the Australian Securities and Investments Commission (ASIC), which was seeking "pecuniary penalties" and orders for AMP to publish an apology.
"There was no entitlement to charge or deduct the fee from the member's account, and the fee should have ceased being deducted from the member's account," Justice Mark Moshinsky said.
Several financial planning companies linked to AMP will have to pay up.
The corporate regulator argued that AMP should pay a $17.5 million fine, while AMP claimed that it should only be fined $4.6 million.
Justice Moshinsky's verdict went towards the higher end of that spectrum – a $14.5 million fine represents almost 9 per cent of the profit that AMP made in the first half of this year.
Case closed
In July last year, ASIC launched civil penalty proceedings in the Federal Court against six AMP companies that it alleged had charged fees for no service on superannuation accounts.
Essentially, the company had charged fees to it clients for services that hadn't been performed, or couldn't (or wouldn't) be performed in the future.
ASIC argued the company had ripped off 1,540 customers over a four-year period — between 2015 and 2019 — in its lawsuit, despite AMP being the largest provider of financial advice in Australia.
As of August, AMP has paid about $627 million to 331,994 customers over fees for no service misconduct.
It's another legal hit for the beleaguered financial services giant, which has charged fees to customers it knew had already died, and is struggling with a share price that has never recovered from evidence presented at the 2018 hearings of the banking royal commission.
It has also faced a revolt from long-standing financial planners affiliated with AMP, after controversial changes that reduced the value of their businesses.
AMP aware since 2018
AMP acknowledged the decision and said it "became aware" of the issues in 2018 and took action to fix them.
"[The company] self-reported it to ASIC, apologised to customers and subsequently completed the remediation of affected members," AMP said in a statement.
Customers were paid back by November 2019, with around 2,500 customers being paid a share of almost $900,000, including fees charged and lost earnings.
AMP said it had already set money aside for the penalty in its half-year financial results.
