The share price for AMP Ltd (ASX: AMP) is climbing Friday, in spite of the Federal Court handing down a massive penalty against the financial giant.
On Friday afternoon AMP shares were up 1.39%, trading at $1.10.
This was all while the Federal Court found four businesses within the AMP group had illegally charged life insurance premiums and advice fees from the superannuation accounts of 2,000 dead customers.
The court ordered two of those entities, AMP Life and AMP Financial Planning, to pay a fine totalling $24 million.
According to Australian Securities and Investments Commission deputy chair Sarah Court, the "misconduct represents a fundamental breach of trust between a customer and their financial services provider".
"Customers, and their beneficiaries, expect financial services providers to have the proper systems in place to ensure, once notified, deceased customers are no longer charged," she said.
"These systems were inadequate, and customers were let down."
Image source: Getty Images
Dead customers were 'vulnerable'
AMP, in an announcement to the ASX, acknowledged the court's decision.
"AMP apologises to all beneficiaries of those affected by this matter," said AMP group general counsel David Cullen.
"We have made strong progress in becoming a customer-focused and purpose-led organisation, and this historical matter is not reflective of the AMP we are today."
He added that "significant changes" had been made to the company's systems to avoid such an incident.
The ASIC investigation found that AMP received more than $500,000 in insurance premiums and more than $100,000 in advice fees from deceased customers.
Both AMP Life and AMP Financial Planning admitted the revenue was accepted even though there were "reasonable grounds" to believe that services could not be provided.
The court found all four AMP businesses had failed to act "efficiently, honestly and fairly", as required by their financial services licences.
Justice Lisa Hespe described AMP's behaviour as "serious, wrongful".
"The deceased members affected were vulnerable, obviously unable to monitor their accounts and were entirely reliant on the representatives of their estates," she said.
"The beneficiaries of those estates involved individuals who may be expected to have been emotionally vulnerable and unlikely to be familiar with the terms of a policy not issued to them or on their behalf."
The wrongdoing did little to improve company performance anyway. AMP shares have sunk a horrific 72% over the past five years.
