- AMP faces a potential class action, one of the biggest in Australian legal history.
- Law firm Slater and Gordon has partnered with global litigation funder Therium.
- Slater and Gordon says a billion dollars has been wiped from AMP’s market cap since revelations in the royal commission of AMP’s wrongdoing.
AMP now faces a potential class action, one of Australia’s biggest by investors, following revelations of misconduct in the Financial Services Royal Commission.
Law firm Slater and Gordon has partnered with global litigation funder Therium to investigate a major investor class action.
The law firm says the investigation gives rise to potential allegations that AMP breached continuous disclosure between May 2015 and April 2018, causing investors who acquired shares to suffer loss.
“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,” says Ben Hardwick, Slater and Gordon’s Head of Class Actions.
AMP’s shares price is currently at $4.045, down 3% today.
The CEO of AMP, Craig Meller, has resigned and the company has apologised. The company admitted in the royal commission to making false and misleading statements to the corporate regulator ASIC.
“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,” says Hardwick.
“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.”
Hardwick says the proposed claim against AMP would allege that the company ought to have disclosed to the ASX that 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.
He says AMP made numerous false and misleading statements to corporate regulator 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.”
Hardwick says 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,” he says.
“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 situations where clients were charged fees for no service:
90 Day Exception. When clients did not have a new financial planner allocated, AMP began an informal policy where fees could be charged to for up to 90 days despite no service being provided.
Ring Fencing. AMP continued to charge fees for the purpose of maintaining a ring fence around that group of clients even when they didn’t have a new financial planner.