AMP to Pay $120 Million Over Fees and Interest Rate Claims in Super Fund Lawsuit
AMP has reached an agreement in principle to settle a long-running class action over fees and interest rates on certain superannuation funds, agreeing to pay $120 million subject to court approval.
- Settlement totals $120 million, with AMP contributing $75 million
- Class action concerns fees and interest rates from 2008 to 2020
- Settlement requires Federal Court approval and final deed execution
- AMP denies any admission of liability in the settlement
- Company highlights recent improvements in superannuation offerings
Background to the Settlement
AMP has announced it has reached an agreement in principle to settle a class action lawsuit brought against its superannuation entities. The legal proceedings, which span over a decade from July 2008 to May 2020, focused on fees charged to members of certain AMP superannuation funds as well as the interest rates and fees applied to cash-only fund options. This settlement marks a significant development in resolving a legacy issue that has lingered over the company.
Financial Terms and Conditions
The total settlement amount agreed upon is $120 million. AMP will contribute approximately $75 million of this sum, with the remaining balance covered by insurance. However, this agreement is still subject to the finalisation and execution of a formal deed of settlement and must receive approval from the Federal Court of Australia before it becomes binding. Importantly, AMP has made it clear that it does not admit any liability as part of this settlement.
Company Perspective and Future Outlook
AMP’s Chief Executive, Alexis George, framed the settlement as a positive step forward, allowing the company to move past this protracted legal matter. She emphasised that AMP has transformed its superannuation offerings in recent years, focusing on delivering strong investment returns, competitive fees, and quality service to members. This suggests a strategic pivot aimed at restoring trust and reinforcing AMP’s position in the superannuation market.
Implications for Investors and the Market
While the settlement resolves uncertainty related to the class action, investors will be watching closely for how the payment impacts AMP’s financials once the settlement is finalised. The involvement of insurance to cover part of the settlement may mitigate some immediate financial strain. However, the company’s insistence on no admission of liability leaves open questions about potential future legal or regulatory scrutiny. The Federal Court’s approval process will be a key milestone to monitor in the coming months.
Bottom Line?
AMP’s $120 million settlement closes a challenging chapter but leaves investors watching for the next legal and financial developments.
Questions in the middle?
- Will the Federal Court approve the settlement without modifications?
- How will the settlement impact AMP’s financial results and capital position?
- Could this settlement influence regulatory scrutiny or future class actions in the superannuation sector?
