The corporate regulator has commenced Federal Court proceedings against AMP Financial Planning for alleged failures to ensure advisers complied with the best interests duty.
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.
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