AMP will review financial advice given to 7000 customers after the Australian Securities and Investments Commission (ASIC) disciplined Australia’s biggest superannuation fund manager over failure to manage conflicts of interest in advice about switching super funds.

CEO Andrew Mohl has admitted the errors and undertaken to improve the system.

“We are disappointed that we have not met the high standards we set for ourselves,” Mr Mohl said. “We know we need to improve our processes and have already started to make changes.”

ASIC Chairman Jeffrey Lucy says the undertaking entered into by AMP was the most appropriate, comprehensive and efficient way of ensuring that clients were able to pursue some recourse.

“Taking the matter to court would not have allowed that to occur – which would have been a far less beneficial outcome for customers,” he said.

ASIC examined 300 files chosen at random from 30 AMP financial planners, mainly relating to advice between January and October last year about switching super funds. It found flaws in almost half of the recommendations and said 45% of the files failed to sufficiently disclose a reasonable basis for the advice given, as required by the law.

AMP Financial Planning agreed it effectively advised customers to switch from rival super funds into what were mostly AMP products and services. 93% of new business was pumped into AMP products.

The regulator found AMP Financial Planning sales teams, paid by commission, were not allowed to recommend that clients open super accounts with industry super funds.

Although advisers could give advice about Australia’s biggest industry super funds, they were not permitted to advise clients to start accounts with them.

The undertaking offered by the company sets out how it intends to rectify these issues and how it will provide suitable redress for clients who received advice that did not have a reasonable basis.