Nick Bruining: Two million old and current customers up for slice of AMP class action over overcharges

More than two million current and former AMP customers have joined a class action against the wealth manager, which began in the Federal Court last week.

Led by class action specialists Slater and Gordon and Maurice Blackburn Lawyers, the case alleges the trustees of several AMP super funds “systematically” overcharged members of some popular products between 2008 and 2020.

Around 2.5 million AMP customers have received invitations to join the class action over the past few weeks. Many have been contacting their financial advisers to ask whether they should participate.

“In some cases, the customers are concerned that the action will impact the financial advisers who may have sold them the product in the first place,” said one former AMP adviser, who asked not to be named.

“We can explain that the action is against the company and not AMP’s former agents”

The products include AMP’s Flexible Lifetime Super and My Super products. In many cases, legacy superannuation products sold from the 1990s on were consolidated into these products over the years.

The claim also includes an allegation AMP was overcharging investment fees on cash and term deposits when no other retail super fund was doing the same.

Slater and Gordon head of class actions Emma Pelken-Caven said thousands of Australians trusted AMP with their retirement savings and instead lost thousands of dollars.

“We believe the evidence in this case will show that AMP was driven by profit and not the best interests of its superannuation members — made up of millions of hardworking Australians,” Ms Pelken-Caven said.

An AMP spokesman told Your Money the firm was defending the class action.

“Our focus is on delivering quality investment returns, low fees and high standards of service and support to our super members,” he said.

A class action is used by a group of people to sue someone or a company for injury, negligence or loss.

In the main, class actions are launched by the larger legal firms, which typically take a sizeable clip from the proceeds if the action is successful.

In a class action, a test case of an individual can become representative of people in a similar or identical situation, collectively known as members of the class action. The test case becomes the basis for the decision that affects all members of the action.

There are variations where you might, for example, only benefit from a favourable decision if you’ve signed up to the class action.

Alternatively, you might be able to use the decision of the class action in court as a basis to pursue your own legal action. You might do better in terms of the amount you receive going down this route, particularly if the class action’s legal fees are steep and your circumstances warrant a greater amount.

In many class action cases, there’s no court decision because the defendant might elect to negotiate an out-of-court settlement. This is often a commercial decision that weighs up the likely costs of defending the action and the chance of success if it ends up in court.

In this situation, only those who signed up to the class action would probably benefit.

The case against AMP has been set down in the Federal Court to run for seven weeks.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association.