Corporations – life insurance fees deducted from deceased customers…

…unconscionable conduct – appropriate penalty

In Australian Securities and Investments Commission v AMP Superannuation Limited [2023] FCA 488 (19 May 2023), Hespe J considered the appropriate penalty to be applied to AMP Life Limited (AMP Life), AMP Financial Planning Proprietary Limited (AMP Financial Planning) and other AMP entities, arising from their deduction – and retention – of life insurance premiums and advice fees from the superannuation accounts of deceased customers.

During the period 26 May 2015 to 31 August 2019, a total of $601,767.87 in premiums and ongoing advice fees was deducted from, and not refunded to, the superannuation accounts of 2156 deceased members. There was no entitlement to charge these premiums and fees to the deceased members.

It was not until the Royal Commission into Misconduct in the Banking, Superannuation and Financial Service Industry that steps were taken to address the issue of charging deceased customers (at [67]).

The AMP entities had made admissions of contravention of ss12CB(1) and 12DI(3) of the the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), and ss912A(1)(a) and (c) of the Corporations Act 2001 (Cth).

However, the AMP entities did not agree with ASIC as to the pecuniary penalty to be imposed. ASIC sought penalties totalling $30 million, while AMP Financial Planning and AMP Life proposed penalties totalling $18 million.

Based on the limited evidence before the Court, Hespe J concluded the factors which caused the contravening conduct included:

  • poorly designed software
  • product administration systems that did not interact easily and failed to give effect to the terms of policies
  • the decentralised manner in which complaints were handled within the AMP Group (at [108]-[109]).

Having canvassed the relevant principles for the imposition of civil penalties (at [134]-[135]), Hespe J did not accept the defendants’ submission that the course of conduct principle was of assistance in the present case (at [141]). His Honour considered that the approach proposed by the defendants would have put the maximum penalty materially below what the defendants themselves submitted was appropriate.

He concluded the preferable approach was to have regard to the nature, extent and circumstances of the contravening conduct, including its common features, rather than determining whether the conduct constitutes one or more “courses of conduct” (at [142]).

His Honour identified:

  • there was a large number of members affected
  • the amounts deducted were significant and the conduct occurred over a long period of time (at [143])
  • there was a failure of systems to prevent the conduct from occurring and to detect and rectify it (at [144])
  • the contravening conduct caused loss and damage (at [145]).

As to the circumstances of the contravening conduct, ASIC submitted that the failure to address the deficiencies in the systems arose because the defendants “did not want to do anything about it, or did not care to do anything about it, in light of the benefits that accrued to them” (at [149]).

The court did not accept this and instead inferred that the failure to address the issues giving rise to the contravening conduct resulted from organisational assumptions, oversight failures and organisational paralysis – rather than a conscious decision to exploit the dead.

Nevertheless, the court described the conduct as concerning (at [150]) and, while not deliberate, extremely serious (at [166]). His Honour considered material that, while only 27 members were identfied as having been charged advice fees, they were 27 out of a sample of 60. His Honour emphasised a need for specific and general deterrence in respect of conduct admitted to be unconscionable.


Hespe J ordered AMP Life and AMP Financial Planning to pay a total pecuniary penalty of $24 million. Declarations were also made that the conduct engaged in by AMP Life and AMP Financial Planning was unconscionable. The AMP entities were also declared to have failed to do all things necessary to provide financial services fairly, honestly and efficiently.

Shanta Martin is a barrister at the Victorian Bar, ph 03 9225 7222 or email The full version of these judgments can be found at Numbers in square brackets refer to a paragraph number in the judgment.

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