In a statement, ASIC alleged that a number of AMP Financial Planning’s (AMPFP) advisers had engaged in ‘rewriting conduct’, where clients were given “advice that results in the cancellation of the client’s existing life, TPD, trauma and/or income protection insurance policies and the taking out of similar replacement policies by way of a new application rather than by way of a transfer”.
These advisers “stood to receive higher commissions” through this method than through a transfer, and left clients exposed to “underwriting and associated risks” unnecessarily.
“ASIC alleges that this type of advice was inappropriate, and that the financial planners failed to act in the best interests of the clients and to prioritise the interests of the clients,” the regulator said.
“ASIC contends 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 in contravention of section 961L of the [Corporations Act].”
According to the statement, ASIC will “rely upon a number of sample client files” in which the regulator alleges this type of misconduct occurred to make their case against the dealer group.
“The sample files involve current and former AMPFP authorised financial planners including, among others, Rommel Panganiban, who was permanently banned by ASIC from providing financial services in September 2016, with that decision affirmed on appeal by the Administrative Appeals Tribunal last year,” ASIC said.
“ASIC will also allege that AMPFP has breached s912A(1)(a), (c) and (ca) of the act, which require a licensee 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.”
Contraventions of Section 961l of the Corporations Act can result in penalties of up to $1 million for each instance.
The regulator also noted it is continuing 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”.
The proceeding is listed for a directions hearing on 27 July 2018, according to the statement.
High time ASIC, commissions And this has been going on for quite a while and you have allowed the damage to be done, sleeping on the wheel, worst kept secret!
Planner
Another nail in the coffin for insurance commissions. It attracted all the wrong people into the industry. Got a degree? Finish high school even? Been in finance before? NO? Great – you’ve got the job!
do you pretty much only publish comments from anonymous?
Primarily, but I’m taking a stand!
I can verify that this is an AMP practice because they just tried to do it to me (within the last two months)! When I alerted them that this was not appropriate and told them the right way to do it they went completely silent. This is really bad because I am actually a big supporter of AMP – just some really bad management and disgraceful board – standards have plummeted since I was there – jury out on Murray.
There is a few details missing from this for me. I am assuming that they are referring to transferring a policy within the same insurer and not transferring externally.
Anyway, the number of times I have tried to make amendments to a clients policy (i.e. as simple as allowing the payment to be paid by rollover) and been told sorry we have to do a cancel and replace is staggering.
The “churning” issue notwithstanding, how many (if any) clients were disadvantaged? ….. methinks this is about protecting the insurer, NOT the client.
My caveat is that I am not privy to the detail. But the whole churning debate as far as I can see isn’t about client outcomes, but about insurer outcomes.
All of them. They were churned from older, superior policies to ones with worse definitions. They also restarted their 3 year non-disclosure period of which I have seen multiple times has been the difference between claim approval and decline. Its a big deal. Insurer shouldnt offer another upfront commission but nobody forced advisers to take it.
Whata good idea. Regulators taking action against the perpetrators rather than tarring the whole industry with the same brush and creating even more onerous legislation.
So let me get this straight. Dover gets shut down by ASIC for reasons only to be known by ASIC but AMP can openly admit to lying to ASIC 20 times (which ASIC then admitted that it knew it was being lied to) and churn clients etc… and all ASIC does is take them to court where the max penalty ($1m) is only 0.001 of their underlying profit ($1040m) last year? #selectiveregulationmuch?
AMP have a nice suit and deep pockets to fix problems, Dover were naked and asking bystanders for loose change for bus fare to get to the op shop.
That’s the difference.
Was the client placed in a worse position as a result of the advice?
Being exposed to underwriting isnt a bad thing in and of itself, is it? It doesnt mean that the client has to proceed if the underwriting reveals something that wasnt previously known. It may actually be a benefit to the client in highlighting a health issue that they didnt was there.
Did the adviser recommend that the client proceed with the cover in the event that the replacement policy was subsequently offered with an exclusion or loading? If he said retain existing cover, that’s a good thing. If he said just proceed, then that’s obviously an issue.
Assuming that the cover was being moved to another insurer, wouldnt the other insurer want to underwrite it even if it was done by ‘transfer’….whatever that is…
Everyone knows that it’s much easier to move a client between insurers if you are looking to upgrade or increase a clients level of cover than it is to try and seek an increase with the existing insurer. The administration offering by insurers to their existing client base in this regard has been sub-standard for years, with the focus been on streamlining the acquisition of new business. As a business owner, these things need to be taken into account.
By moving the cover, the client is exposed to the non disclosure clause again for another three years. Meaning that if, during the underwriting process, they forgot to disclose something they maybe disclosed on their previous application, a claim under the new policy could be declined during that period. While this is not sufficient to stop doing the replacement if it’s best for the client, it is something to be mindful of.
Correct, Runner. Those who churn dont care about that though, they just want the commission.
That’s always something to be considered, 100% agree with that. In many cases though, these changes are driven by client action upon the receipt of renewal notices.
The case of Victorian adviser who moved a client from AMP to AIA is a case in point. The client called extremely pissed off at the increase in premiums and said something to the effect that I’m cancelling this cover unless you can get me something better (ie cheaper). Cover was arranged quickly for the client but issues with non-disclosure by the client meant that he was subsequently denied a claim. When you hear the facts on this, I believe the adviser was totally stitched up. Even when you are doing the right thing for clients & acting in their best interests, you can still get pinged as this guy did. Fortunately he kept great records which meant that he wasnt fitted up for the entire claim.
This was literally promoted internally at AMP. I have seen the email. It was raised to compliance as well.
AMP Financial Planning. A valued member of the FPA… now offering AMP advisers 10% off their membership dues. It’s quickly becoming spot the dodgy adviser just use the FPA member search.
They will uncover lots of advisers that were churning over the years. There would be quite a few that did it and were never sanctioned as it was all about sales and New Business. AMP know who they are but the management remuneration was based on production.
This has been widespread well before 2007 and was common practice at ING ans others I happened to be invited as the only planner to a function for 20 and the bragging of how the would write insurance policies for the same clients left a bad taste in my mouth.
The action appears to be aimed at the AFSL, not AMP Life, who facilitated the writing of new business on existing policies. And was the client better off ( say better trauma definitions)
No, the opposite. They promoted older policies with better definitions to be rewritten to worse policies that were more profitable… Hence paying a commission on rewriting internally.
And here was me thinking that laws were the same for all parties, how naïve of me. if I had done even a tenth of what the AMP has done my license would be gone and my name would have been dragged through the mud with a jail term. Too big to fail.
Would be nice if the IFA also reported on the AMPFP advisers who are doing the right thing by the client!
Why? Doesn’t make a headline does it…
Fair enough that’s the real downside of all this, not hearing about all the good work Advisers do. However to remove the incompetent, unqualified and just woeful middle & executive leadership at these institutions, who brought the industry to where it is now, there will have to be a lot more pain yet to come.
There was no middle or executive leadership sitting in the advisers offices when this churning was occurring. While they ultimately responsible – the advisers knew what was right and what was wrong. Its hard to stop someone determined to do the wrong thing -despite laws and oversight. Just ask the police.
Nice try blaming the troops on the ground, even a few bad ones, but it’s the Generals and Majors who set the strategy. 1. If license fees are set low, the AFSL operates at a loss. 2. One way for the “group” to recover that loss is to sell house product including the most profitable product. 3. Based on that model you could keep professional standards low and reward abhorrent behaviour. 4. ALL ADVICE is given by the AFSL, not the individual Adviser – so yes management are effectively sitting in at every meeting as the Adviser signs off the SOA for them. Check the Regulatory Guidance and Corporations Law requirements as to supervision and monitoring then google “epic fail”.
That’s right, ultimately it is the adviser’s choice to choose to take advantage of the clear conflict of interest to make more money at the expense of the client.
Just that response from Sceptical tells you how bad things are. Most institutional AFSL employees don’t even understand it’s their job to oversee advice and want to blame the Adviser every time. Anyway, you will all be gone soon enough.
AMP only have salespeople.
Rubbish
Be a pretty easy list to compile, very short lol.
Why – that’s just what they should be doing and what they get paid for… What is news is when people behave badly. Those at AMP who do the “write” thing (sorry) should be throwing stones at their peers who did not. Oh, and can that Anonymous fellow stop clogging up these pages? Names, please.
I keep putting a name on my comments Phil but most times it just doesnt show. Not sure if its a software issue…