The Australian Securities and Investments Commission (Asic) said AMP Financial Planning (AMPFP) failed to ensure its advisers acted in the best interests of clients when they rewrote, rather than transferred, policies.
Asic alleges that AMPFP advisers received higher commissions by instructing clients to submit new applications instead of transferring policies, which also exposed the clients to underwriting and associated risks.
Lawyers for Asic will argue that, by 1 July 2013, “AMPFP knew or ought to have known that its authorised financial planners were (or there was a risk that they were) engaging in rewriting conduct and the detriment this conduct caused to the clients, yet in the period from 1 July 2013 to 30 June 2015 AMPFP failed to take reasonable steps to deal with the conduct”.
Breach of best interests duty
Asic uncovered the breach in a sample of client files involving current and past AMP advisers including Rommel Panganiban.
Panganiban was permanently banned by Asic from providing financial services in September 2016, with that decision affirmed by the Administrative Appeals Tribunal last year.
If Asic wins the case and proves AMP breached its “best interests duty”, the financial planning firm could face a maximum penalty of A$1m (£560,000, €630,000, $740,000) per failure.
Asic will also allege that AMPFP breached its requirement “to ensure that the financial services covered by its licence are provided efficiently, honestly and fairly; to comply with financial services laws; and to take reasonable steps to ensure that its representatives comply with the financial services laws”.
The action against AMPFP is scheduled to start in Sydney on 27 July 2018.
Asic will continue to separately investigate AMP in relation to fees for no service conduct and in relation to the making of false and misleading statements to Asic and is facing five class action suits.
Stronger action
Since the start of the Royal Commission into banking, superannuation and financial services, Asic has increasingly been taking stronger regulatory action against financial institutions.
On 14 June, it filed similar legal proceedings against major bank Westpac over allegations of poor financial advice being provided by one of its former employees.
With 177 clients identified so far, and a potential fine of A$1m per contravention, Westpact faces a substantial fine.
