Super funds holders launch class action against MPAs on "dishonest" commissions

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May 30, 2019 at 06:01:34

Shocked by the scandal, the asset management company AMP faces another collective action, this time from its customers, who hope to recover hundreds of millions of dollars lost after their super funds have been eroded by taxes.

Key points

  • Maurice Blackburn claims that 2.5 million AMP superannuation accounts have been charged with excessive administrative costs
  • The lawyers believe that the damages against the AMP could be "very, very significant"
  • The finance company has already been hit by a shareholder share

Law firm Maurice Blackburn stated that the last lawsuit would be based on revelations to the Royal Banking Commission that AMP usually paid more administrative fees than it should have.

Chief lawyer Brooke Dellavedova said there could be major damage to the finance company.

"We collectively believe that there are about 2.5 million accounts, so the damage will probably be very, very significant," he said.

The company is already dealing with shares from its shareholders, after the share price collapsed following the investigation.

He is also taken to court by the Australian Securities and Investments Commission (ASIC), which is seeking civil sanctions against the company.

The main plaintiff Sebastian Smith said he had no "idea" of what he had lost in taxes since the first entry into the fund, which was the default supplier for his employer.

"My ideal result is that everyone gets all the money they should have, and is calculated on what would have been useful at retirement age," he said.

"Dishonesty is dishonesty … if you're taking $ 10 a month from someone 40 years later worth $ 100 or $ 200 a month, then I think you're taking $ 200 a month from them.

"It's like stealing something … it's just putrid, I think."

Dellavedova stated that the case will take information from 2013, and would argue that the companies related to the AMP group would charge customers 1.5% commission, when they should have been 0.5%.

"If for example you … had a super budget of $ 100,000 in one year, it would be a $ 1,000 premium," he said.

"This is a six-year application period, so during the period that would be $ 6,000 – not taking into account the capitalization effect, because obviously super is destined to be continuously invested and to obtain compound returns".

Professor Michael Legg of the University of New South Wales said class actions could have broader implications for shareholders and, to a lesser extent, for clients.

"It is more than ever if a company has to make a big payment, so you can expect … the prices of their products, subject to the competitive conditions of the market, may have to increase to be able to cover the payment" He said.

Customers quote "relatively modest" amounts

Starting with last year's real banking commission, AMP was on the front page for the wrong reasons – from charging its customers for no service fees to deliberately and repeatedly mislead ASIC about its mistakes.

The royal commission's revelations led to AMP CEO Craig Meller, president Catherine Brenner, and half of his council resigned.

The finance company has already been hit by a shareholder action, also led by Maurice Blackburn, after the company won the right to present the case to the court, over four other companies that were pushing to represent investors against the company at the beginning of this month.

In a separate issue, individual MPA executives could be accused of criminal charges for the "billion dollar service" scandal.

Dellavedova said the case would give super funds that have lost a "relatively modest" amount of money in commissions and the opportunity to seek justice.

"Most people could not sue the AMP for losses of several thousand dollars, but if the group gets together and does an action, then it can recover that money," he said.

"It is an important question, because it is the money that people have earned, it is their money, it is for their retirement and accumulates over time."

The collective action will be paid by Harbor's lender, who will take 20% of each down payment up to $ 125 million in damages and 10% in cash for it.

Themes:

law-crime-and-justice,

Royal-committees,

Company-News,

business-economics-and-finance,

board,

melbourne-3000

vic,

Australia

First published

May 30, 2019 05:02:06

. (tagsToTranslate) amp (t) class action (t) maurice blackburn (t) superannuation fees (t)

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