AMP share price rises even as ASIC launches civil lawsuit
We examine the details of the regulator’s lawsuit against the beleaguered wealth manager.
AMP just can’t catch a break.
The Australian Securities and Investments Commission (ASIC) today announced that it had initiated civil proceedings against the financial services company in relation to the allegation that AMP charged fees to deceased customers.
These fees were charged to deceased customers for both life insurance premiums and the provision of financial advice. It is also alleged that AMP had been notified that these customers were deceased.
Overall, the regulator described this behaviour as ‘unconscionable’.
The civil complaint is being launched against the following AMP companies: AMP Superannuation, NM Superannuation Proprietary, AMP Life, AMP Financial Planning, and AMP Services.
What could this mean for AMP?
ASIC said that it was seeking ‘declarations of contraventions of the ASIC Act and Corporations Act’ as well as ‘pecuniary penalties and other orders’ to be issued in Federal Court.
AMP response
In a market update AMP acknowledged the civil proceedings brought to it by ASIC.
The financial services company stressed that after observing a process issue with how it handled deceased customer accounts, it self-reported this issue to the regulator.
The company further added it has since taken measures to rectify the process issues which caused its deceased customers to continue to be charged fees, and has since returned over $5 million to some 10,000 customers.
Commenting on ASIC’s decision to proceed with a civil case, AMP group general legal counsel, David Cullen, said:
'AMP has taken this matter very seriously and we will now carefully consider the allegations raised by ASIC. We have been assisting ASIC with its investigation and will continue to engage constructively as part of the legal process.'
'When we discovered the issues, we immediately moved to change our processes and systems and took action to ensure the beneficiaries of customers impacted were fully remediated. AMP apologises to all customers and beneficiaries who were impacted by this matter.'
AMP share price in decline
The company’s five-year chart tells the story of a business in decline and out of favour with the market. In that period the stock is down some 81%, representing a brutal reality for those with a set and forget mindset.
Among this descent, and in the last two years in particular, there are those who would seek to position AMP as a value play. Yet even across a shorter horizon, holding AMP would have likely proven disastrous. The stock is down 34% in the last year, to illustrate that point.
Often the line between value play and trap is a fine one.
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