Aggrieved investors take on AMP
MELBOURNE, 30 April 2018: Australia’s leading litigation funder IMF Bentham Limited (ASX:IMF), and leading class action law firm Phi Finney McDonald, announce they are preparing a class action against AMP for misleading investors and breaching continuous disclosure obligations.
The Federal Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (established 14 December 2017) has heard that AMP may face proceedings for criminal misconduct arising from its deliberate practice of charging customers fees for services that were never provided, and could not be provided.
AMP has admitted the practices were deliberate, and that it had repeatedly mischaracterised them to the Australian Securities and Investments Commission (ASIC) and to its customers as being ‘administrative errors’. In the wake of the Royal Commission hearing, AMP has apologised for these practices.
“It is all very well for AMP to say that it ‘unreservedly’ apologises to the regulator, but where does that leave investors in AMP shares who have seen billions of dollars wiped off AMP’s market capitalisation in the last two weeks?” said Phi Finney McDonald director, Tim Finney.
“Australians are appalled by stories emerging from this Royal Commission,” said Mr Finney. “AMP’s conduct, possibly criminal in nature, is the worst of a bad bunch.”
Mr Finney said that the action would seek compensation for investors who acquired shares in AMP between 24 May 2013 and 13 April 2018. “ASX-listed companies need to properly compensate their investors when their misleading conduct causes them loss”, said Mr Finney. “This class action will be open to all shareholders aggrieved by AMP’s misconduct.”
“Following a comprehensive due diligence and investment committee process, IMF Bentham’s team of highly experienced litigation experts are satisfied there is evidence that AMP has breached its obligations and engaged in misleading and deceptive representations to the market. IMF’s competitive funding terms for this class action will be well received by investors”, said IMF Investment Manager Ewen McNee.
The Financial Services Royal Commission has exposed AMP’s long-running practice of charging ongoing services fees:
- without providing any relevant service or advice to customers; and
- in circumstances where AMP lacked any capacity to provide any relevant service or advice to customers.
These fees breached the Corporations Act (Act), contracts with customers, and the conditions of applicable Australian Financial Services Licences (AFSLs). The Royal Commission has heard that senior management personnel at AMP were aware of these practices, and were aware that they contravened the Act and the conditions of applicable AFSLs.
AMP misled ASIC about these fees, by mischaracterising them as ‘administrative errors’. In practice, the fees were charged to customers by deliberate AMP policy.
In the weeks since these matters were uncovered by the Royal Commission:
- AMP’s share price has fallen from $4.78 (at the close on 13 April 2018) to $4.02 (at the close on 27 April 2018), a fall of 16%
- the Chief Executive Officer, Craig Meller has resigned
- the Chairperson, Catherine Brenner, has stepped down from her role; and
- the General Counsel, Brian Salter has left the company.
Counsel assisting the Royal Commission has suggested there may be more findings of misconduct by AMP, including criminal misconduct by knowingly misleading ASIC.
Phi Finney McDonald is one of Australia’s leading class action law firms, specialising in shareholder class actions. Tim Finney, Director, Phi Finney McDonald | +61 3 8639 5524 | [email protected]