The corporate regulator is suing the finance giant in the Federal Court, accusing it of charging customers who had already exited its product.
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The AMP Ltd (ASX: AMP) share price will be in focus on Friday morning after the Australian Securities and Investments Commission revealed it has started legal action against the finance giant.
The corporate regulator announced that 6 AMP businesses are accused of charging advice fees to 1,540 clients even though it knew they were no longer able to access such advice.
The customers formerly had employer-sponsored superannuation with AMP but had already departed those accounts when the fees were charged.
As well as the fees themselves, ASIC is alleging AMP failed to have a system in place that detected such erroneous charges.
The regulator also accuses AMP of breaching its Australian financial services licence obligations to act “efficiently, honestly and fairly”.
ASIC, through a civil case in the Federal Court, is seeking declarations, penalties and adverse publicity orders.
The AMP share price closed Thursday at $1.06. The stock has dropped more than 80% in just over 3 years.
Customers have been paid out, says AMP
AMP acknowledged the case to the ASX on Friday morning, saying it became aware of the issue in 2018.
“AMP took action to rectify the issue, self-reported it to ASIC, and commenced a remediation process,” the statement read.
“The remediation was completed in November 2019, with approximately 2,500 customers being remediated a total sum of approximately $900,000 covering fees charged and lost earnings.”
The 6 AMP businesses facing the allegations are:
AMP Superannuation Limited
AMP Life Limited (which is now owned by Resolution Life NZ)
AMP Financial Planning Proprietary Limited
AMP Services Limited
Charter Financial Planning Limited
Hillross Financial Services Limited
The Federal Court is yet to set a date for a case management hearing.
The latest case against AMP follows ASIC’s legal action in May that accused the financial services provider of charging life insurance premiums and advice fees to more than 2,000 deceased clients.
That issue is due for a further case management hearing on 12 October.
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.