Following the findings from the banking royal commission’s interim report last week, financial services company AMP has defended its policy to continue charging customers life insurance premiums even after they’ve passed away.
AMP rejected the report’s findings and defended its right to charge premiums for a short time after a customer has passed away, claiming it is “inevitable” and “appropriate” for that to happen until they have been notified of the death
They also stated that it is their policy to refund those premiums upon payment of the life insurance claim, saying in a statement: “It has always been AMP’s policy to refund premiums incurred after a member’s death. It is inevitable and appropriate that premiums will continue to be deducted after a person’s death and before AMP is notified of that death.
“AMP has always had a process in place to refund these premiums upon payment of the life insurance claim. In April 2018, an issue arose in relation to the manner in which these refunds were calculated and processed for payment. The issue did not concern whether AMP would refund the premiums, as it has always been AMP’s policy to do so. The issue concerned process errors that were revealed for the first time in April 2018, and which were reported by AMP.
“AMP rejects any suggestion that it was aware of these process errors historically and that it has previously failed to report them.”
— The Today Show (@TheTodayShow) October 3, 2018
Counsel assisting the royal commission, Rowena Orr, QC, told the Sydney Morning Herald that AMP may have committed a crime after failing to notify the Australian Securities and Investments Commission that it had charged insurance premiums to dead people within the legal time frame.
Orr also said AMP’s conduct could have breached its obligations to act efficiently, honestly and fairly and also amounted to conduct below community standards.
The preliminary findings of Commissioner Kenneth Hayne’s royal commission were released on Friday, as Treasurer Josh Frydenberg delivered a press conference to discuss what he described as a “frank and scathing assessment” of the Australian financial sector, and demand better for the Australian public going forward.
“This interim report is a frank and scathing assessment of the culture, conduct and compliance of our financial system. Australians expect and deserve better,” he said.
“Australians expect their superannuation services, their are insurance services, their banking services, their financial advice to be delivered in a way that puts their interest first. That the consumer comes first, second and third. In fact, these financial entities have an obligation under their licence to act honestly, fairly.”
The publication of the interim report comes after four rounds of hearings, the first of which kicked off in March, which covered consumer credit, financial advice, small and medium (SMEs) lending and regional and remote banking.
Writing in the report’s executive summary, Hayne credited greed for the poor conduct of some of the country’s biggest banks. Offering an answer to the question ‘why did it happen?’, he said: “Too often, the answer seems to be greed – the pursuit of short term profit at the expense of basic standards of honesty.”
He added: “Banks, and all financial services entities recognised that they sold services and products. Selling became their focus of attention. Too often it became the sole focus of attention. Products and services multiplied. Banks searched for their ‘share of the customer’s wallet’. From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales.”
The next round of hearings is due to start in November and will focus more on policy.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.