The Hayne banking and finance royal commission continues to impact financial services groups with the huge National Australia Bank revealing a significant change in management yesterday as a result of the inquiry, and the AMP revealing yet another series of dumb moves that could very well see it charged by corporate regulators.
The NAB move is covered in a separate story, but the AMP is another reminder that there appears to be a long list of problems in financial services just waiting to be uncovered by the royal commission.
Yesterday’s revelations saw the AMP accused of charging nearly $1 million in life insurance premiums to thousands of its superannuation members it knew were dead. it is another set of fees for no service charges against the wealth manager.
The royal commission has previously revealed cases where the Commonwealth Bank and the National Australia Bank have been charging advice fees to dead super members.
The royal commission heard AMP’s group executive of wealth solutions and chief customer officer, Paul Sainsbury, confirm that the AMP had charged more than 4,600 dead superannuation customers for life insurance, despite knowing there was no life left to insure.
Responding to questions from counsel assisting the commission Mark Costello, Mr. Sainsbury said AMP had discovered in April that it had deducted life insurance premiums from some of its members’ accounts after their death but had not refunded those premiums.
As a result, AMP owes the superannuation members’ deceased estates about $1.3 million, in what is another fees-for-no-service scandal to hit Australia’s largest wealth manager.
AMP knew about a similar issue involving life insurance premiums not being refunded to deceased estates in 2016, the commission was told on Monday.
But it only started an investigation in April, after the royal commission revealed some Commonwealth Bank of Australia advisers had continued charging dead customers fees.
AMP Life then found premiums were still being deducted from the accounts of dead AMP superannuation members, despite it being told they had died and processing their death claims.
AMP blamed a number of system errors that meant it either did not stop deducting life insurance premiums from dead super members’ accounts or did not process premium refunds owed to them.
By June when AMP reported the issue to regulators, it estimated $922,902 in premium refunds were owing to 3124 members. Mr. Sainsbury revealed on Monday that the number had now reached 4,645 dead customers and $1.3 million in premiums.
He said the investigation was continuing and other fees may also be refunded.
Mr Sainsbury agreed with royal commissioner Kenneth Hayne that AMP had charged for something it was not entitled to charge.
Silly investors sent AMP shares up 1.9% to $3.20 (they hit a new all-time low last week of $3.08).
The market still has this unerring ability to misjudge the proceedings of the royal commission and their impact on the listed financial group.
