On 19 May 2023, the Federal Court of Australia handed down its decision in Australian Securities and Investments Commission v AMP Superannuation Limited1, fining AMP Superannuation Limited (AMP) $24 million for charging life insurance premiums and advice fees to more than 2,000 deceased clients.
This case acts as a timely reminder to corporations to ensure that their internal processes and systems are up to date and compliant with all applicable laws.
ASIC commenced proceedings against four AMP companies (part of the AMP Group),2 for charging retention of life insurance premiums and advice fees from superannuation accounts for the period between 26 May 2015 to 31 August 20193.
In each case, there was no entitlement for AMP to charge or deduct the premiums or fees because AMP had been notified that the members were deceased and did not receive the services.4
During the relevant period, a total of $601,767.87 in advice fees and premiums were paid.
The Federal Court held that AMP had:
For these breaches, two of the AMP companies were fined a combined penalty of $24 million.
Significance of the proceedings
It is clear from the proceedings and the Court's reasons that AMP did not have adequate systems in place to:
Further, the culture within AMP was to assume that there were no systemic issues, and AMP did not have a process in place that was capable of identifying, investigating, and remedying any systemic issues.
The conduct proved costly to AMP and is yet another example of ASIC’s willingness to commence proceedings against Australian Financial Services Licensees (AFSL) for breaches of the Corporations Act and ASIC Act in relation to conduct arising from the lack of adequate internal systems and processes. ASIC had previously commenced similar proceedings against MLC Limited which resulted in a fine of $10 million.7
This case is a reminder to corporations about the consequences of failing to have proper internal processes and policies which are monitored, particularly as ASIC will continue to prosecute AFSL for breaches of the Corporations Act and ASIC Act.
Proper systems should be in place from the outset to prevent systemic issues or mistakes, and processes should be adopted to detect and rectify systemic deficiencies. Ongoing reviews of internal processes and policies are important to ensure up to date procedures and systems, and to minimise the risk of exposure.
If you require advice as to compliance with the Corporations Act or ASIC Act, please do not hesitate to contact the Litigation and Dispute Resolution team at Lavan.
1 FCA 488.
2 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.
3 Australian Securities and Investments Commission, ‘Court penalises AMP $24 million for charging deceased customers’ (Media Release, 23-129MR, 19 May 2023) link.
4 Australian Securities and Investments Commission, ‘Court penalises AMP $24 million for charging deceased customers’ (Media Release, 23-129MR, 19 May 2023) link.
5 Corporations Act 2001 (Cth) s 912A(1)(a).
6 Australian Securities and Investments Commission, ‘Court penalises AMP $24 million for charging deceased customers’ (Media Release, 23-129MR, 19 May 2023) link.
7 Australian Securities and Investments Commission v MLC Limited  FCA 539.