AMP shares have fallen to a fresh 15-year low after the corporate watchdog launched Federal Court action against the wealth manager over allegations its advisers pushed customers into less suitable insurance policies purely to win commissions.
The company’s shares fell as much as 1.1 per cent to $3.53 in early trade on Thursday, their lowest since August 2003.
The Australian Securities and Investments Commission has alleged that AMP employees advised life insurance customers to take out new policies that downgraded cover but earned higher commissions.
It contends that AMP failed to take reasonable steps to address the issue.
The legal action was made public after the market closed on Wednesday, postponing any impact on AMP shares, which have lost a third of their value since March as its inner workings have been discussed at the banking royal commission.
Chief executive Craig Meller, chairman Catherine Brenner, chief legal officer Brian Salter and three directors have all left since the company’s head of financial advice admitted to the commission that AMP charged customers fees for financial advice that was never delivered and repeatedly lied about it to ASIC.
ASIC late on Wednesday said its proceedings were related to AMP’s alleged failure to ensure financial planners acted in the best interests of their clients.
“By advising clients to submit new applications, the financial planners stood to receive higher commissions than they would have received under a transfer, whilst at the same time exposing the clients unnecessarily to underwriting and associated risks,” ASIC said.
“ASIC alleges that this type of advice was inappropriate, and that the financial planners failed to act in the best interests of the clients and to prioritise the interests of the clients.”
One of the financial planners involved in the allegations was NSW adviser Rommel Panganiban, who was permanently banned by ASIC from providing financial services in 2016 for failing to act in his clients’ best interests and for prioritising his own interests.
At 1030 AEST, AMP shares were still down 2.5 cents, or 0.7 per cent, at $3.545.