Concern over compo delay for AMP clients

A judge is concerned those harmed by AMP’s unlawful life insurance conduct are still out of pocket two years after he ordered compensation.

The wealth management giant was fined $5.2 million in March 2020 and agreed to compensate customers for a financial planner’s unlawful practice of “churning” clients.

Described by the Federal Court as “morally indefensible” conduct, AMP clients wanting to change life insurance policies were encouraged to cancel and sign up again as new customers, pocketing the planner a much larger commission.

However, policyholders were forced to sit through waiting periods - such as a 13-month ban on suicide-related claims.

AMP knew in mid-2013 the churning was occurring but failed to properly investigate until late 2014. The financial planner was banned from the industry in 2016 by the corporate regulator.

On Friday, as AMP sought another extension in time to comply with the court-ordered remediation program, Federal Court Justice Michael Lee expressed concern about the progress thus far.

“I’ve seen the very, very small number - the vanishingly small number of people - who have actually received compensation,” Justice Lee said.

“I thought what I was ordering was that people were being compensated for loss, not some sort of bargaining process which might result in releases.”

Imtiaz Ahmed, counsel for AMP, said the delays were in part because AMP needed to contact affected people and receive information from them, to determine appropriate remediation.

While acknowledging there may be good reason for AMP’s tardiness, Justice Lee expressed regret he’d been swayed into allowing AMP to use a “heavily bureaucratic” process.

“All I wanted was for people to be given compensation,” he said.

AMP will be able to explain itself fully in a hearing at a later date.

In separate federal cases, the company is accused of charging 1500 customers fees for no service and continuing to charge 2000 dead clients for insurance.

The first case is scheduled for a final hearing on August 29 while the dead clients case will go to trial in Melbourne in December.