Australia’s federal court has found that AMP failed to take reasonable steps to ensure its financial planners acted in the best interests of their clients.
The long-running case was brought by the Australian Securities and Investments Commission (Asic) and alleged that AMP’s financial planners engaged in “rewriting conduct”.
This involved cancelling client’s existing insurance policies and taking out replacement products by way of a new application – rather than a transfer.
This enabled the advisers to earn higher commissions.
Gone badly wrong
In its decision on 5 February, the federal court noted that the rewriting conduct by one of AMP’s financial planners, Rommel Panganiban, was “morally indefensible”.
It accepted Asic’s case that, having become aware of Panganiban’s conduct, it was necessary for AMP to ascertain the extent of breaches by other planners to meet its legal obligations.
AMP failed to do so.
The court found “the lack of an effective response is an illustration of how badly things had gone wrong within the organisation”.
The financial institution was fined A$5.175m (£2.67m, $3.48m, €3.15m).
The presiding judge, Michael Lee, said that “this penalty proceeding reflects a lamentable failure of corporate will to take the necessary steps to prevent greedy and unlawful conduct taking place, and a further failure to adopt a swift and proper remedial response”.
Panganiban was permanently banned from providing financial services by Asic in September 2016.
