AMP Sued For Unethical Behavior

Embattled wealth manager AMP is being sued by Australia's financial watchdog over claims its financial planners advised clients to take out new life insurance policies to boost commissions. The Australian Securities and Investments Commission (ASIC) commenced proceedings in the Federal Court against AMP Financial Planning yesterday.

ASIC alleges AMP's financial planners engaged in 'rewriting conduct', where clients were encouraged to take out new life insurance, trauma or income protection policies instead of being transferred within the client’s existing policies. The financial planners stood to gain substantially larger commissions as a result.

ASIC also alleges that by filling out new applications, the financial interest of the AMP Financial Planning clients became exposed to unnecessary underwriting risks.

AMP said in a statement to shareholders it had been cooperating with ASIC since 2014 on the matter. It said it would file its defence in due course.

“ASIC’s pleadings in particular identify the conduct of a former AMPFP adviser, Rommel Panganiban, who engaged in insurance rewriting,” the statement said.

“AMPFP removed Mr Panganiban’s authorisation in 2014 and reported his conduct to ASIC.  Mr Panganiban was subsequently banned by ASIC in 2016. AMP is apologising to the customers impacted by Mr Panganiban’s actions and they are currently being compensated. We have continued to enhance our monitoring and supervision activities to monitor the writing of new insurance policies.”

It's been a tumultuous year for AMP, which has seen its share price plunge from a high of $5.20 in December 2017 to its current price of $3.57.

It also lost two of its top executives, with AMP CEO Craig Meller and AMP chair Catherine Brenner quitting their posts in April. Their exits stemmed from claims made against the financial institution during the Royal Commission into Australia’s banks.

During the Royal Commission, AMP admitted it charged customers fees for financial advice that was never delivered and repeatedly lied to ASIC about its behaviour.