AMP has been slammed over “vanishingly small” compensation payouts for unlawful life insurance conduct. 

AMP was fined $5.2 million in March 2020 and ordered to compensate customers for a financial planner’s unlawful practice of “churning” clients.

AMP clients looking to change life insurance policies were told to cancel and sign up again as new customers, which gave the planner a much larger commission.

But this left policyholders forced to sit through waiting periods including a 13-month ban on suicide-related claims.

AMP was found to have known about the ‘churning’ practice as early as mid-2013, but failed to properly investigate for over a year. The financial planner was eventually banned from the industry in 2016.

AMP has been in court to ask for another extension to comply with the court-ordered remediation program, where Federal Court Justice Michael Lee expressed concern about its progress.

“I’ve seen the very, very small number – the vanishingly small number of people – who have actually received compensation,” Justice Lee said.

“I thought what I was ordering was that people were being compensated for loss, not some sort of bargaining process which might result in releases.”

Counsel for AMP, Imtiaz Ahmed, says the delays were partly due to AMP needing to contact affected people and receive information from them.

Justice Lee acknowledged there may be good reasons for AMP’s tardiness, but regretted that he had been swayed into allowing AMP to use a “heavily bureaucratic” process.

“All I wanted was for people to be given compensation,” he said.

AMP will have the chance to explain itself fully in a hearing at a later date.