Aussie Regulator Commences Legal Action Against AMP Over Life Insurance ‘Rewriting’



In the proceedings, which will take place in the Federal Court of Australia, ASIC will allege that some AMPFP advisers engaged in ‘rewriting conduct’ where they provided advice that led to the cancellation of an existing policy and its replacement by a similar but new policy application, instead of a transfer.

ASIC stated the advisers involved would have received higher commissions under this process and also unnecessarily exposed their clients to underwriting risks, and this type of of advice was inappropriate, failed to act in the best interests of the clients, and failed to prioritise the interests of the clients.

The regulator will also allege that AMPFP failed to ensure its authorised advisers complied with the best interests duty and related obligations under the Corporations Act.

Specifically, ASIC will contend that by 1 July 2013 AMPFP knew or ought to have known that its advisers were at risk of, or actually, engaging in rewriting conduct and the detriment this conduct caused to the clients, but, in the period from 1 July 2013 to 30 June 2015,  failed to take reasonable steps to deal with the conduct.

To support its claims, ASIC will call upon sample client files of current and former AMPFP authorised financial advisers in which it alleges rewriting conduct occurred, including those of former adviser Rommel Panganiban, who was permanently banned by ASIC in September 2016.

ASIC stated the adviser conduct was in breach of section 961L of the Corporations Act, which is a civil penalty provision, and attracts a maximum penalty of $1 million per contravention.

The proceeding is listed for a directions hearing in Sydney on 27 July 2018 and is separate from an ongoing investigation into AMP in relation to fees for no service conduct and in relation to the making of false and misleading statements to ASIC.

This is the second civil proceedings case launched by ASIC this month, with the regulator having also begun proceedings against Westpac, alleging breaches of best interest duties.