AMP keeps refunds in-house
AMP has outraged the customers that it was meant to be appeasing.
The wealth manager appears to have come up with a new tactic to delay returning money it stole in the fees-for-no-service scandal.
AMP is meant to be refunding hundreds of millions of dollars in fees and charges that it stole from its own clients.
The repayments were ordered after the banking royal commission found charging fees but providing no service was “taking money for nothing”.
Reports this week say AMP has been putting that money into new accounts, and charging new fees.
Instead of asking customers where to send their money, AMP opened new super accounts in their names.
AMP put the funds into Eligible Rollover Fund [ERF] accounts, which are typically poor performers.
AMP ERFs have returned just 2.6 per cent over the past decade, significantly lower than the median return of 4.6 per cent for other ERFs, according to APRA data. They are the second worst-performing fund in the category.
Andy Schmulow, an adviser to the World Bank on market conduct rules, said AMP’s actions are indefensible.
“It is simply unbelievable that after the horror show of the royal commission, AMP has learned nothing, it hasn’t changed, won’t change and demonstrates that the company no longer has the right to exist,” Dr Schmulow told reporters.
AMP even charges fees on the accounts no one asked for.
The company claims there are “no exit or entry fees” for the ERFs, but does not mention the fees charged while the account is open.
Those fees start at 2.36 per cent for “administration” as well as a 0.69 per cent investment fee – all far higher than the fees charged by some of Australia’s top-performing investment funds.
Dr Schmulow says AMP’s financial success rests on keeping the ill-gotten funds within the institution.
“If there was anybody at AMP that said opening new accounts with the stolen money is a clever strategy of keeping funds under management, they should have been sacked. This is so bad,” he said.
“They obviously have these former clients’ details – addresses, emails, phones. It’s clear they put no effort into actually trying to give people their money back.”
AMP says it is operating legally.
“Remediating customers as quickly as possible is our priority – for members without a current AMP super account, payments were made through an eligible rollover fund (ERF), which was the fastest way to return money to clients and meets the legal requirement for the money to remain within superannuation,” an AMP spokesperson told reporters.