AMP Limited (ASX: AMP) may soon face a class action for allegedly prioritising profits over client interests.
According to reporting by Lawyers Weekly, Shine Lawyers is preparing to imminently file the action which will claim AMP breached fiduciary and statutory duties to around 100,000 clients.
The class action is set to be filed in the Federal Court against AMP Life Limited, AMP Financial Planning Pty Ltd, and financial planning subsidiaries Charter Financial Planning Pty Ltd and Hillross Financial Planning Pty Ltd.
Shine Lawyers will allege that AMP Financial Planning failed to provide financial advice and act in clients' best interests via its authorised representatives and subsidiaries, breaching its duties.
What does the action claim?
The class action claims advisors employed by Charter Financial Planning Pty Ltd and Hillcross Financial Planning Pty Ltd received commissions and inducements to recommend insurance via AMP Life Limited.
It is alleged that advisors recommended AMP products despite knowing clients could access preferable or at least equivalent products at lower premiums through other insurers.
AMP Life Limited, it is argued, knowingly received the proceeds of inflated insurance premiums recommended by AMP financial advice licensees and their authorised representatives.
Jan Saddler of Shine Lawyers told Lawyers Weekly, "AMP has encouraged and incentivised its financial advisers to prioritise their personal gain above their professional obligations. The clients, who should have been AMP's primary concern, have been financially disadvantaged as a result."
Who can participate?
Anyone who obtained an AMP Flexible Lifetime Policy that includes death, total permanent disability (TPD), trauma, income protection and business protection insurance since 2013 following a recommendation by AMP Financial Planning, Charter Financial Planning and Hillross Financial Services, or their authorised representatives is eligible to participate.
The action alleges that clients should be compensated for excessive premiums paid by them as a result of the impugned conduct. "It's unacceptable that hundreds of thousands of Australians who thought they were getting objective financial advice have instead been ripped off. AMP Financial Planning and its authorised representatives have breached the trust of clients who relied on their advice to make decisions about their personal insurances," Saddler claimed.
AMP in the firing line
The action comes in the wake of the Federal Court ruling last week that AMP failed to prevent insurance churning by financial planners. AMP is facing a $5.175 million penalty after the court found it failed to take reasonable steps to ensure financial planners complied with their obligations under the Corporations Act, including the obligation to act in the best interests of clients.
AMP is facing at least three other class actions, including two relating to fees for no service conduct uncovered by the Royal Commission. A third relates to the charging of excessive administration fees to superannuation members.
