AMP Class Action: Slater and Gordon partners with litigation funder Therium
Posted on 24 Apr. 2018
Leading class action law firm Slater and Gordon has partnered with globally active litigation funder Therium to investigate a major investor class action against AMP, following shocking revelations of misconduct in the Financial Services Royal Commission.
The investigation to date gives rise to potential allegations that AMP breached its continuous disclosure obligations between 28 May 2015 and 13 April 2018, causing investors who acquired shares during this period to suffer loss.
Slater and Gordon Head of Class Actions Ben Hardwick said the AMP claim had the potential to be one of Australia’s biggest investor class actions.
“More than a billion dollars has been wiped from AMP’s market cap since these revelations were made public during the Royal Commission hearings and it has left thousands of investors reeling,” Mr Hardwick said.
“Not only did senior executives admit AMP had been charging significant fees for financial advice services it did not provide, but they also admitted the bank tried to conceal these practices by repeatedly telling ASIC they were the result of an administrative error.
“We allege that this conduct was both unlawful and unethical and reflected serious compliance problems within AMP, and the market had a right to be informed about what they were buying into.”
The allegations against AMP
On 27 May 2015, AMP issued a breach report to ASIC in relation to a regular practice of charging ongoing fees to customers in circumstances where they received no service.
Mr Hardwick said the proposed claim against AMP would allege that the company ought to have disclosed to the ASX from 27 May 2015, that:
- for many years, it had regular business practices of charging financial 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 those customers;
- it made numerous false and misleading statements to the Australian Securities and Investments Commission (ASIC) 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; and
- 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.
“We allege this conduct escalated and continued without being disclosed until it was ultimately revealed in the Royal Commission in the week commencing 16 April 2018.”
Fees for no service
Mr Hardwick said AMP’s practice of charging fees for no service centred around its advice business buyback program.
“Rather than being directly employed by the bank, financial advisers working under the AMP brand were usually independent businesses giving advice as an AMP authorised representative,” Mr Hardwick said.
“Under their agreement, AMP was required to buy back advisers' client books with sufficient notice, usually when advisers wanted to retire, close their practice or leave the industry.
“AMP was not able to provide financial advice services itself, so problems arose when the bank failed to find suitable buyers for the client books that it was required to purchase within the notice period.
“This led to two main situations where clients were charged fees for no service:
- 90 Day Exception: Where clients did not have a new financial planner allocated, AMP began an informal policy where fees could be charged to these clients for up to 90 days despite no service being provided.
- Ring Fencing: Where clients did not have a new financial planner allocated, AMP continued to charge fees for the purpose of maintaining a ‘ring fence’ around that group of clients. This retained the resell value of the client books as purchasers would not pay as much if they had to reapproach clients to start charging fees after they had been stopped.
The proposed claim will be funded by Therium, a globally active litigation funder.
Investors who acquired shares in AMP Limited (ASX: AMP) at any time between 28 May 2015 and 13 April 2018, and who suffered a loss as the result of acquiring those shares can register their interest in the class action by visiting this link.
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