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AMP admits ‘letting customers down’ after $5 million fine

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AMP has apologised for “clearly unacceptable” conduct after the Federal Court last week fined it more than $5 million for insurance “rewriting”.

The court found AMP financial planners provided advice resulting in the cancellation of a client’s existing insurance policies, before taking out similar replacement policies through a new application, rather than a transfer.

The Australian Securities and Investments Commission (ASIC), which brought the case against AMP, says this was done to boost commissions.

“By cancelling insurance policies and advising clients to submit new applications, clients were exposed to a number of significant risks and the planners received higher commissions than they would have by simply transferring the policies,” ASIC said.

The court found AMP “failed to take reasonable steps” to ensure its planners complied with the best interests duty and related obligations under the Corporations Act.

It said there were six contraventions of section 961L of the Corporations Act and imposed a penalty of $5.175 million.

Following the ruling, AMP released a statement saying it had admitted the allegations and “apologised unreservedly for the conduct”.

“While insurance rewriting was not a common practice by financial advisers at AMP Financial Planning, the conduct identified in the case was clearly unacceptable and customers were let down,” it said.

“AMP has improved monitoring and supervision processes within our advice network and introduced stronger measures to protect clients.”