The Australian Securities and Investment Commission (ASIC) has taken embattled financial planners AMP to the Federal Court on Wednesday afternoon, claiming AMP financial planners were engaged in 'rewriting' conduct.
The corporate watch dog alleges AMP has breached its obligations under the Corporations Act after claiming financial planners provided advice that results in the cancellation of the client's existing life, trauma, and income protection policies and then taking out similar replacement policies by way of a new application rather than by way of transfer.
As such, the financial planners stood to receive higher commissions than they would've received under a transfer, but exposed clients to a number of risks.
The watchdog says that this type of advice allegedly given to AMP clients was inappropriate.
In the Federal Court, ASIC claims that by 1 July 2013 the financial planning firm ought to have known that this conduct was occurring but didn't take any reasonable steps to curtail the conduct of its financial planners.
One of the financial planners under ASIC's microscope for allegedly having conducted 'rewriting' is Rommel Panganiban, who was permanently banned from ASIC in September 2016.
The penalty for engaging in this type of conduct is $1 million per contravention.
The proceeding is listed for a direction hearing in Sydney on 27 July 2018.
These latest allegations follow the widely publicised condemnation of AMP by ASIC relating to its fees for no service conduct that came out during the Royal Commission into the finance and banking sector.
ASIC says it continues to separately investigate AMP in relation to the fees for no service conduct.
Business News Australia