Money & Banking
"The company no longer has the right to exist": AMP sparks outrage
Former AMP customers and consumer rights groups have been outraged by the wealth manager’s tactic to delay returning money that it stole in the “fees-for-no-service” scandal.
The “fees-for-no-service” scandal included customers being charged ongoing fees by financial advisors despite not receiving a yearly review as well as charging accounts of people who have died.
AMP is now putting the money that it stole into new accounts and then charging new fees.
The company has been forced to refund hundreds of millions of dollars in fees and charges that it took from clients, according to the ABC.
Late last year, AMP started to alert former clients about the money that it took in fees while providing no service and opened a new super account in the clients name instead of sending the money back to the client.
"As your account with us is closed and we can't pay super benefits directly to you, we've paid this amount into a new AMP Eligible Rollover Fund [ERF] account that was opened in your name," it told them.
The move has been slammed as “simply unbelievable” by regulatory and corporate governance academic Andy Schmulow, who lectures at the University of Wollongong.
"It is simply unbelievable that after the horror show of the royal commission, AMP has learned nothing, it hasn't changed, won't change and demonstrates that the company no longer has the right to exist," Dr Schmulow said in an interview to the ABC.
An independent advocacy centre for superannuation customers has also criticised AMP’s move as a shameless grab for new accounts that can be charged the new fees.
"This is absurd — people left the fund because it was ripping them off, they're now being forced to re-join to get their money back," Xavier O'Halloran from Super Consumers Australia said.
"To make matters worse, they are being thrown into an AMP fund which has massively underperformed comparable funds over the longer term."
While there is no entry or exit fees in the AMP fund, there is nothing said about the fees that are charged while the account is open.
Administration fees for the fund start at 2.36 per cent with another 0.69 per cent charged as an investment fee.
These are far heftier than the fees charged by some of Australia's top-performing investment funds, which return in excess of 20 per cent," Mr O'Halloran said.
"For people with low balances, this looks like a naked attempt by AMP to claw back its ill-gotten gains."
In the letter received by former clients however, they were urged by AMP not to do anything as the payment has already been made.
The payment was made into new accounts that the customers knew nothing about.
Mr O'Halloran said: "People would have been much better off being reunited with the money AMP stole from them by having it put into their existing super accounts."
AMP responded briefly to questioning from the ABC, explaining why it didn’t first contact former clients before setting up new accounts on their behalf, saying that the practice was legal.
It declined to say just how many new accounts were set up or why information about moving the money into a new super account wasn’t included in earlier correspondence to clients.
"Remediating customers as quickly as possible is our priority — for members without a current AMP super account, payments were made through an eligible rollover fund (ERF), which was the fastest way to return money to clients and meets the legal requirement for the money to remain within superannuation," an AMP spokesman said.
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