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, marking another significant step in addressing legacy issues tied to its former advice and insurance operations. The settlement, reached in principle, remains subject to the execution of a deed of settlement and approval by the Federal Court of Australia. AMP has emphasised that the agreement does not constitute an admission of liability.
The class action, launched in 2020 in the Federal Court of Victoria, 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. The claim asserted that advisers steered customers towards AMP-linked life insurance policies on unfavourable terms. Resolution Life Australasia, formerly AMP Life, was also named as a party to the proceedings. The allegations focused on the payment of commissions and pricing structures applied to life insurance cover between July 2014 and February 2021.
According to the claim, authorised representatives failed to act in the best interests of their clients by prioritising AMP-branded products instead of comparable or cheaper alternatives available in the wider market. It was further alleged that AMP failed to implement adequate systems, oversight mechanisms and supervisory processes to prevent such conduct. Compensation was sought for excess premiums, embedded product commissions and ongoing service fees which were said to have been charged despite many clients receiving no ongoing advice.
The class action reflected broader concerns about advice remuneration, vertically integrated business models and the risk of in-house product bias, particularly during a period when such practices were under rigorous regulatory and political scrutiny in Australia. Many of the issues raised in the case echoed findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which had highlighted systemic conflicts of interest in advice and product distribution arrangements.
Law firm Shine alleged that AMP advisers placed the sale of AMP-linked life insurance ahead of client outcomes, sometimes at inflated premium levels. The claim also asserted that many customers were not informed that they could obtain substantially equivalent or better cover from other insurers for lower premiums. The group of affected clients was estimated at around 100,000 across AMP Financial Planning, Charter and Hillross licensees, along with policyholders of life insurance products issued by the then AMP Life business.
The settlement sum is intended to address alleged losses suffered by clients between July 2014 and February 2021. These include higher-than-necessary premiums for the level of cover obtained, commissions embedded in AMP-related life policies and ongoing service fees purportedly charged where no such services were provided. The precise allocation of settlement funds will depend on the court-approved methodology for assessing individual losses and determining the proportion applied towards legal and administrative costs. Members of the claim group will not be required to establish misconduct in their individual files; the court will assess the matter on a class-wide basis.
For the financial advice sector, the case again highlights the significant financial and reputational risks faced by licensees when systemic advice failures go unaddressed, especially where conflicts of interest in product recommendations are not properly managed or disclosed. The proceedings also underscored the central importance of effective supervisory systems in ensuring compliance with statutory duties.
The settlement follows a larger class action resolution earlier in the year relating to alleged excessive fees within AMP’s superannuation business. In that matter, AMP agreed to pay $120 million in response to claims that trustees had systematically overcharged members of certain superannuation funds between 2008 and 2020. As in the present case, AMP made no admission of liability and indicated that a portion of the settlement would be funded through insurance.
In recent years, AMP has divested its life insurance operations and its employed financial advice business, repositioning itself as a more streamlined organisation focused on wealth management, banking and superannuation. Chief executive Alexis George stated that she was pleased another legacy legal matter had been resolved as the company concentrates on its future direction and ongoing commitment to serving customers and members.
For the broader industry, the AMP settlement stands as a reminder that legacy advice frameworks, commission structures and vertically integrated product arrangements can continue to generate lasting legal and financial consequences long after they have been restructured or abandoned.