AMP Limited’s Subsidiaries Face Superannuation Class Action Proceeding

  • May 30, 2019 AEST
  • Team Kalkine
AMP Limited’s Subsidiaries Face Superannuation Class Action Proceeding

Established in Australia 170 years ago, AMP Limited (ASX: AMP) is into the business of wealth management. The company delivers solutions and services spread across financial advice,banking, superannuation, investment management, life insurance, self-managed superannuation funds etc. The company has clientele in Asia, the Middle East, Europe, North America and the United Kingdom. AMP is operational in eleven countries. It aids customers to manage their finances and accomplish their goals.

On 30th May 2019, the company accredited to the fact that few of its subsidiaries were facing an superannuation class action proceeding. This had been filed in the Federal Court at Melbourne by Maurice Blackburn, a law firm. The matter is related to the fees charged to members; it is alleged that AMP overcharged on their accounts.

It is believed, as per market participants, that around 1 million customers were charged with the higher fees. The trustees breached their legal duty and could not conclude if the fees were reasonable or they should pursue a better deal. The case would consider customers who have had accounts in the company from 2013 until the changes made in 2018. AMP’s funds were under the radar from the Hayne royal commission last year too.

After the royal commission became aware of the company’s outsourcing of its superannuation funds to other of its entities, the company reduced the fees that it charges its superannuation trustees.

Meanwhile, the company stated that it would take charge and defend the alleged proceeding strongly. The company would act in accordance with legal and regulatory obligations. An AMP spokesman mentioned that the company had made a fee reduction on its MySuper products in 2018. In 2019, it also reduced the fee in the MyNorth product.

Earlier in May, the company announced that it had appointed Marissa Bendyk as General Counsel, Corporate and Governance and Group Company Secretary. Her term was effective starting 6th May 2019.

The company conducted its Annual General Meeting on 2nd May 2019. One of the main highlights of last year was the company’s decision to divest its life insurance and mature business to Resolution Life.

On the financial side though, 2018 proved to be a difficult year for the company.

2018 results (Source: Company’s report)

The company’s underlying profit was six-eight million dollars and its profit attributable to shareholders was twenty-eight million dollars. This was adversely impacted by the issue with the Royal Commission. Besides this, customers had to be remediated in the advice business and the insurance business did not perform too well. AMP held a capital position of worth A$1.65 billion, which was above the regulatory requirements at year-end.

The company predicts 2019 to be a transformative year for it.

2019 priorities (Source: Company’s report)

Share Price Information:

The stock closed the day’s trade at A$2.180, marginally down by 0.457%. At current price, the company has an annual dividend yield of 6.39% and PE of 216x (as on 30 May 2019).


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