AMP fined $5.2m

AMP has been ordered to pay a $5.2 million penalty after the Federal Court found the bank had failed to take reasonable steps to ensure its financial planners complied with the best interests duty.

The case was brought forward by the Australian Securities and Investments Commission, which alleged that a number of AMP financial planners had engaged in 'rewriting conduct' - which is providing advice that resulted in the cancellation of the client's existing insurance policies by way of a new application, rather than through a transfer.

ASIC said the bank had exposed it clients to a number of significant risks, while the planners received higher commissions than they would have by simply transferring the policies.

In its decision, the Court noted that the rewriting conduct by one of AMP’s financial planners, Mr Rommel Panganiban, was "morally indefensible".

The Court accepted ASIC's case that it was necessary for AMP to ascertain that, having become aware of Mr Panganiban's conduct, it was necessry to ascertain the extent of breaches by other planners to meet its legal obligations.

AMP failed to do so, and the court found: "The lack of an effective response is an illustration of how badly things had gone wrong within the organisation."

The Court indicated it would make orders requiring AMP to undertake a review and remediation program to ensure financial planning clients who were subject to rewriting conduct are detected and properly remediated.

The Court will also require the bank to develop a compliance plan that seeks to prohibit rewriting conduct through improved communication, training and supervision by AMP of its financial planners.