AMP Reaches $29 Million Settlement in Long-Running Advice Class Action

AMP has agreed to pay $29 million to settle a long-running class action concerning the conduct of its aligned financial advisers in recommending in-house life insurance products. The settlement marks a further effort by the company to address outstanding legacy issues tied to its former advice and insurance operations. The agreement, reached on an in-principle basis, remains subject to the execution of a formal deed of settlement and approval by the Federal Court of Australia. AMP has maintained that, in settling the matter, it has not admitted liability.

The class action was initiated in 2020 in the Federal Court of Victoria. It alleged that advisers operating under AMP Financial Planning, Charter Financial Planning and Hillross Financial Services breached fiduciary and statutory duties owed to tens of thousands of clients by steering them towards AMP-linked life insurance policies on unfavourable terms. Resolution Life Australasia, formerly AMP Life, was also named in the proceedings. The allegations centred on the payment of commissions and pricing of life insurance cover between July 2014 and February 2021.

According to statements made in the claim, authorised representatives failed to prioritise the best interests of their clients by favouring AMP-branded life insurance products instead of comparable or more affordable alternatives available elsewhere. It was also alleged that AMP did not implement adequate systems, oversight arrangements or supervision to prevent such conduct. Compensation was sought for what were described as excess premiums, embedded product commissions and ongoing service fees which many clients purportedly paid without receiving corresponding advice services.

The case reflected broader concerns during the period about vertically integrated financial advice models, remuneration structures and potential in-house product bias. Many of the issues raised aligned with findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which uncovered systemic conflicts of interest within the Australian advice landscape.

Law firm Shine argued that AMP advisers prioritised selling AMP-linked life insurance over securing the best outcomes for clients, in some cases at inflated premium levels. The claim further alleged that clients were not informed that substantially equivalent or better cover was available from other insurers at lower premiums. The group of affected clients was estimated at approximately 100,000 across AMP Financial Planning, Charter and Hillross licensees, as well as policyholders of life products issued by the former AMP Life business.

The $29 million settlement sum is intended to address alleged losses incurred by clients between July 2014 and February 2021. These losses were said to include premiums higher than necessary for the level of insurance cover obtained, commissions embedded within AMP-linked policies and ongoing service fees charged despite no ongoing advice or service being delivered. The allocation of settlement funds will depend on the methodology approved by the Federal Court, including how losses are assessed for individual clients and the proportion allocated to legal and administrative costs. Group members will not be required to prove misconduct in their individual advice files, as the settlement will be assessed on a class-wide basis.

For the financial advice industry, the case highlights the financial, legal and reputational risks that arise when systemic advice failures are not adequately addressed. The proceedings underscored the importance of robust supervisory frameworks, effective conflict-management systems and transparent remuneration structures. The claim also reinforced regulatory concerns regarding fees-for-no-service arrangements and the need for evidence of services delivered when recurring fees are charged.

The settlement follows a much larger class action resolved earlier in the year involving alleged excessive fees in AMP’s superannuation business. In that instance, AMP agreed to pay $120 million in response to allegations that trustees had systematically overcharged members of certain AMP superannuation funds between 2008 and 2020. As with the current matter, AMP did not admit liability and stated that insurance would cover part of the settlement.

AMP has undergone significant structural change since the period covered by the class action, selling its life insurance operations and its employed financial advice business. The company has repositioned itself as a more streamlined organisation focused on wealth management, banking and superannuation. Chief executive Alexis George said that resolving another legacy legal matter would help the company focus on its future priorities and on delivering for customers and members.

From an industry perspective, the AMP settlement is another illustration of how historic advice models, commission structures and vertically integrated product arrangements can continue to generate financial and legal consequences long after they have been reformed or abandoned.