AMP shares fell to a fresh 15-year low yesterday after ASIC launched Federal Court action against the wealth manager on Wednesday afternoon over allegations its advisers churned customers into less suitable insurance policies purely to win commissions.
The company’s shares fell as much as 1.1% to $3.53 in early trade on Thursday, their lowest since August 2003. The later won back ground to end the day up 0.3% at $3.58.
The Australian Securities and Investments Commission is alleging that AMP financial planners advised life insurance customers to take out new policies that downgraded cover but earned higher commissions.
The regulator contends that AMP failed to take reasonable steps to address the issue.
ASIC 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."
The parties are in court next month and AMP says it will work with ASIC.
