Banking royal commission: AMP took life premiums from dead customers

0
96
Banking royal commission: AMP took life premiums from dead customers

AMP staff knew the company was charging thousands of dead customers life insurance premiums for at least three years, the Hayne royal commission has heard.

On Monday, it emerged that the diversified financial services player had identified internally that it was charging dead customers as far back as 2015.

A frustrated Commissioner Kenneth Hayne was compelled to clarify “Charging premiums for life insurance to someone that is dead? That’s the position isn’t it?”

AMP staff officially identified a problem in April of this year and the issue was escalated to a working group in June however it was the subject of a customer complaint as far back as 2015 and internal discussion at AMP from at least 2016.

AMP’s estimates that 4,645 AMP super fund members had been overcharged $1.3 million, however, the investigation is still ongoing and the figure may rise.

Advertisement

Counsel assisting Mark Costello was exploring deficiencies in the model AMP operates that mean it runs both super funds and the group life insurance policies that super funds hold.

Mr Costello asked AMP group executive wealth solutions and chief customer officer Paul Sainsbury about circumstances where dead members were having insurance premiums deducted.

“These included premiums for life insurance, where there was no longer a life to insure,” Mr Costello asked.

Mr Sainsbury agreed this was the case. He said that following the elevation of the issue to a working group in June the company would find 3,123 dead members had been charged $922,922.

“Is it your understanding that AMP has a continuing entitlement to charge premiums for life insurance to a person who is dead?” Mr Costello asked.

“No. That’s not our practice. Not our policy” Mr Sainsbury replied.

Mr Costello showed internal correspondence between AMP staff that appeared to recognise the problem years earlier but did nothing to resolve it.

What does it say about AMP’s systems that the issue was identified in 2016 but the review wasn’t started until 2018,” Mr Costello asked.

Mr Sainsbury did not agree with the question and characterised the issues identified in 2015 and 2016 as of a different nature.

He also acknowledged that AMP identified the issue only after it was revealed that Commonwealth Bank were charging dead customers for financial advice on April 19 during the third round of hearings.

Mr Sainsbury was AMP’s fourth highest paid group executive taking home $2.4 million in 2017. His salary and bonus was behind former CEO Craig Meller’s $5.3m package, AMP Capital CEO Adam Tindall’s $3.2m package and CFO Gordon Leferve’s $2.4m package.

AMP’s share price was unaffected by the news and at 12.15pm they were 7¢ or 2.2 per cent higher at $3.21.

Read More

LEAVE A REPLY

Please enter your comment!
Please enter your name here