New litigation funding package for AMP claimants
On 18 May 2018 Slater and Gordon and Therium announced that it will offer shareholder claimants the most competitive funding package of all of the five actions announced to date.
Slater and Gordon will undertake its work on the action on a No-Win No-Fee basis enabling litigation funder Therium to slash its funding commission to just 10 per cent. We are prepared to act on this basis to ensure that claimants are represented by experienced lawyers who will prosecute this important claim in a timely and cost effective manner.
Therium’s commission rate of 10% is calculated by reference to the net recoveries in the action. This means that the commission will be charged on the amount remaining after the deduction of the legal costs and other expenses involved in the claim.
The low rate, combined with the net recovery method of calculating commission, is a market-leading offering. The distinction between calculating commission on gross versus net recoveries is particularly important where law firms are operating on a ‘no win, no fee’ basis
, - as the litigation funder continues to have an incentive to closely supervise lawyers’ costs as the matter progresses.
What the case is about?
Slater and Gordon consider that eligible shareholders may have claims against AMP Limited (AMP) in relation to its failure to disclose to the ASX that:
- For many years it had regular business practices of charging advice customers ongoing service fees in circumstances where it knew it was not entitled to charge those fees because it was not providing any services to the customers;
- It made numerous false and misleading statements to the Australian Securities and Investments Commission designed to present the problem of charging ongoing services fees where it was not providing any services as being caused by administrative oversight or error rather than deliberate business practices;
- The practice of deliberately charging customers in circumstances where AMP knew it was not entitled to do so, and the subsequent misleading of ASIC, arose from inadequate monitoring, reporting and governance controls, and a lack of verification procedures and proper oversight of interactions with ASIC.
On the basis of our investigations to date, we consider that AMP’s failure to disclose the matters described above may have constituted a breach of the ASX Listing Rules and the Corporations Act 2001 (Cth), and caused AMP shares to trade at a price significantly greater than their true value.
When the matters described above were revealed in the Financial Services Royal Commission the AMP share price fell by approximately 10%.
Who can register to be part of the proposed class action?
The proposed claim is open to all current and former investors who acquired AMP shares between 7 May 2013 and 13 April 2018 (inclusive) and suffered a loss by reason of the matters described above.
For the avoidance of doubt, if the only shares you acquired during the above period were through participating in AMP’s Dividend Reinvestment Program (AMP’s DRP), then you are still able to register for this class action.
Participants will not be required to pay any out of pocket fees.
Timeline of events
As part of AMP’s business model, it often buys the “customer book” of financial advisers that operate under an Australian Financial Services Licence held by AMP or its subsidiaries.
AMP’s desired outcome is to on-sell the “customer book” to another adviser, but this is not always possible, or does not always happen quickly.
When AMP bought these “customer books”, it did not provide any advice services to the customers, so its formal policy was that ongoing service fees should be immediately switched off.
However, from as early as 2006, AMP had a number of business practices whereby it continued to charge ongoing service fees to many of these customers, despite knowing that it would not provide them with any advice services and so was not entitled to charge them ongoing service fees.
Those practices continued until at least November 2016, during which time over 15,000 customers were unlawfully charged ongoing service fees while not receiving any services.
On 27 May 2015, AMP made the first of 20 false or misleading statements to ASIC in a breach report concerning charging fees for services not provided, which presented the problems as having arisen from administrative errors or oversights that were recently discovered, when in fact AMP knew that they arose from deliberate business practices that had been in place for a long time.
On 16 and 17 April 2018, these matters were revealed publically for the first time in the course of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. By the end of that week, AMP’s share price had fallen approximately 10% in response to these revelations.
Investors who purchased shares in AMP, or participated in the AMP’s DRP, at any point between 7 May 2013 and 13 April 2018 can register below.
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