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A class action brought by former clients of AMP (ASX: AMP) over its historical insurance advice practices has been settled for $29 million, more than five years after proceedings commenced and 11-plus years after the first alleged behaviour took place.
Shine Lawyers and Piper Alderman filed the class action on behalf of the clients of several AMP-affiliated companies seeking compensation for commissions, excess premiums and alleged ongoing service fees (OSFs) for services the didn't receive from July 2014 to February 2021.
Financed by litigation funder Woodford, the class action was commenced in the Federal Court of Australia in 2020 against AMP Financial Planning, Charter Financial Planning, Hillross Financial Services, AMP Life and Resolution Life Australasia.
The claimants argued that these companies allegedly incentivised authorised representatives through commissions and other benefits to recommend certain financial and insurance products including from AMP Life.
The class action also alleged that the respondents failed to inform their clients that they could obtain substantially equivalent or better insurance policies than the AMP Life Products from alternative insurers for lower premiums.
It was alleged that the respondents' conduct likely caused their clients to pay higher insurance premiums, and that they failed to implement systems and processes to ensure that their authorised representatives complied with their duties to clients.
AMP revealed to the ASX today that the settlement for a total of $29 million is subject to the finalisation and execution of a deed of settlement and approval by the Federal Court of Australia.
In reaching a settlement, AMP makes no admission of liability.
Today's announcement comes just a few months after AMP reached a $120 million settlement in September for a class action brought by superannuation clients over fees charged and interest rates receives. Two years ago, AMP agreed to pay $100 million to settle a class action brought by financial advisers who had their exit payments dramatically cut by the company in 2019.
"I’m pleased that we have resolved another legacy legal matter as we focus on the future and on delivering for our customers and members," says AMP chief executive Alexis George.
Piper Alderman describes the in-principle agreement as an important outcome for group members, providing the class with closure over the proceedings that arose out of findings in the Misconduct in the Banking,
Superannuation and Financial Services Industry inquiry.
"The settlement provides certainty by eliminating the risks associated with ongoing litigation. It ensures that group members are no longer exposed to the stress and unpredictability of a prolonged court process,” says Kate Sambrook, a partner at Piper Alderman leading the action.
The law firm adds that by resolving the class action, group members may receive financial compensation which can help mitigate any financial losses or burdens they may have experienced due to the commissions and premiums charged on financial and insurance products.
The market responded positively to AMP's announcement today with its shares up 1.5 per cent in early trading at $1.827.
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