(Reuters) – The Australian Federal Court on Tuesday fined A$14.5 million ($9.74 million) to wealth manager AMP (OTC:) Ltd for charging clients a “no-service fee” on their pension accounts.
The Australian Securities and Investments Commission (ASIC) alleged in 2018 that companies related to the wealth manager were charging fees from clients despite being advised that they could no longer access advice.
Between July 2015 and September 2018, AMP entities deducted A$356,188 from the fee even though they knew members were out of work and could no longer receive counseling services, the court found.
AMP acknowledged the claims and said it reported the issue to the regulator in 2018 and provided treatment to affected customers in November 2019.
“Although AMP has processed A$691,032 for affected clients, the court found that AMP had failed to investigate whether or not there was a systemic problem, despite numerous complaints over a long period of time,” ASIC said.
AMP said the penalty received on Tuesday was already provided for in its 2022 semi-annual financial statement.
“Pension trustees should treat today’s sanction as an important reminder to maintain strong escrow arrangements and internal governance,” said Sarah Court, ASIC Vice President.
AMP has been embroiled in scandals surrounding its practices and company culture, including allegations that five related companies charged life insurance premiums and advice fees to more than 2,000 clients after their deaths.
A Royal Commission investigation in 2018 found that the 172-year-old had engaged in “unreasonable” behavior and that Australia’s largest bank had broken laws when providing financial advice.
(This story restores the currency correction in the third and fifth paragraphs to Australian dollars)
($1 = 1.4890 Australian dollars)