Investment News NZ highlights the issue of 'zombie fees' in its recent piece on ASIC's legal action against five AMP entities in Australia. "Zombie fees" are fees which carry on being charged even if no service is being given, sometimes even if the client has died. Of course, if an investment management service is continuing then some level of fee should continue but it is hard to argue advice is being given if the client is dead. In a sector which usually knows the age of its clients and offers products explicitly focused on end-of-life issues we are being challenged to be more active in identifying when a client dies, which is a matter of public record, rather than simply continuing to take the money.
In a release, the Australian Securities and Investments Commission (ASIC) says the legal action alleges five AMP entities “were involved in charging life insurance premiums and advice fees to more than 2,000 customers despite being notified of their death”.
Last year AMP paid out about A$9 million in a remediation program established to redress fees charged to close to 20,000 dead insurance and superannuation fund clients.
But the latest ASIC action comes in “respect of 2,069 deceased members affected by the retention of premiums, and 27 members affected by the retention of advice fees”.
Does this affect New Zealand? Not directly, in the Investment News NZ column it is clear that NZ entities are not part of the recent news. However, it is clearly unacceptable to continue to charge premiums and or advice fees long after a person is dead in either jurisdiction. We can expect that when conduct law passes here, a conduct program will need to envisage how to identify if a person has died and how to treat products while and end-of-life process is followed. Advisers, largely exempt from the conduct programs, will inevitably be caught by either their obligations under the Financial Advice Provider license, Code, or commitments to product providers.
You can read more at this link: https://investmentnews.co.nz/investment-news/zombie-fee-charges-rattle-amp/
Other daily news:
Kōura is calling for advisers that want to offer a 'facilitated' digital advice process. This underlines the trend towards convergence of digital and human in contrast to the binary view of development in the past.
Seth Godin shares with us how not to miss a deadline - and how to - in two interesting and challenging posts: https://seths.blog/2021/05/how-not-to-miss-a-deadline/