AMP says it will vigorously defend itself against a fresh class action suit alleging more than two million investors were gouged for excessive fees on their super accounts.
Slater and Gordon filed the latest action against the beleaguered wealth manager on Wednesday, claiming compensation for AMP investors as far back as 2008.
The law firm alleges that, through arrangements entered into with related parties, trustees AMP Super and NM Super paid too much to related AMP entities for administration services.
It also says the company failed to secure an appropriate return on cash-only investment options.
“Superannuation members trusted that AMP would act in their best interests when managing their retirement savings. Instead, they charged exorbitant fees,” Slater and Gordon senior associate Nathan Rapoport said in a release on Wednesday.
“Members whose funds were deposited in cash-only investment options were short-changed potentially thousands of dollars because they received interest rates below what a reasonable and diligent trustee could have obtained on the open market.”
AMP said in a statement it would vigorously defend itself against the accusations.
“AMP and the trustees of its superannuation funds are firmly committed to acting in the best interests of their superannuation members and acting in accordance with legal and regulatory obligations,” a spokeswoman said.
“We encourage any customers who have concerns to contact AMP”.
AMP has been hit with a number of shareholder class action suits – including separate action by Slater and Gordon – over the scandals revealed at the banking royal commission and the resulting damage to the embattled financial giant’s market value.
More than $10 billion has been wiped from the company’s value since March 2018 after the wealth manager was dragged over the coals at the royal commission, prompting a clear-out of its top brass and millions of dollars in remediation to customers.
AMP was trading 2.22 per cent higher at $2.075 by 1442 AEST on Wednesday, having hit another new all-time low of $2.00 on Tuesday.
In May, AMP shareholders voted in favour of the company’s remuneration report, but the leadership team said further uncertainty lay ahead as it embarked on a multi-year journey to lift earnings and rebuild its share price.
AMP’s superannuation arm last month was hit with a lawsuit by Maurice Blackburn for allegedly charging fund members “unjustifiably” high fees for an extended period of time.
APRA this month also issued new licence conditions on AMP Super amid ongoing concerns over the company’s management.
The new directions require AMP Super to renew and strengthen its four-member board and to engage an external expert to report on remediation and compliance with the new directions and conditions.
AMP has said it will fully implement the directions and additional conditions.
Slater and Gordon on Wednesday said the royal commission had heard evidence of a particular group of AMP cash option members who received negative returns due to a combination of an uncompetitive interest rate and excessive fees, and the trustee was not even aware of this.
“These customers would have been better off keeping their retirement savings under their bed,” Mr Rapoport said.
AMP said it had reduced the administration fees on some of its cash investment options to address the issue of negative returns in the small number of funds impacted.
It cut fees on its flagship MySuper products in 2018, which it said benefited approximately 600,000 existing customers as well as new customers, and in 2019 it also cut fees to MyNorth.
“We are also compensating affected customers for lost earnings,” an AMP spokeswoman said.