The Australian Securities and Investments Commission (ASIC) has begun a civil action against AMP Financial Planning for alleged insurance policy churning.
ASIC says AMP planners provided advice that led to clients cancelling life, total and permanent disability, trauma and income protection policies and replacing them with similar policies rather than simply transferring them.
It alleges AMP failed to ensure planners comply with the best-interests duty and related obligations, in contravention of the Corporations Act.
The planners stood to gain higher commissions as a result, and exposed their clients to unnecessary underwriting risks.
ASIC alleges AMP knew or should have known by July 1 2013 that its planners were engaged in “rewriting conduct”, yet until June 30 2015 it did not take reasonable steps to stop this. The maximum penalty under the Act is $1 million per breach.
The regulator will also allege AMP breached sections of the Corporations Act that require it to ensure financial services are provided efficiently, honestly and fairly.