AMP Financial Planning (AMPFP) has been sued by the Australian Securities and Investments Commission (ASIC) over charges of failing to take action against financial planners who offered conflicted insurance advice to clients in order to earn higher commissions.
The corporate watchdog alleged that financial planners of AMPFP engaged in rewriting conduct, under which clients’ existing insurance policies were cancelled and replaced with similar ones through new application instead of transfer.
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“By advising clients to submit new applications, the financial planners stood to receive higher commissions than they would have received under a transfer, whilst at the same time exposing the clients unnecessarily to underwriting and associated risks,” the regulator said in a statement.
Overall, ASIC found six AMP employees advising about 40 life insurance customers to purchase new policies with lower level of cover between 2012 and 2013 in order to earn higher fees.
The AMP unit was aware of the matter since 2013, ASIC alleged, but failed to take action against the planners for two years. A hearing for the case is scheduled in Sydney on 27 July 2018.
AMP has recently also been under the scanner for revelations at the banking royal commission that it charged fees for no service and misled regulators. Many of the firm’s senior level employees, including its CEO, chairman, and chief risk officer, quit soon after the scandal.
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