Shine Lawyers is investigating a class action against embattled wealth manager AMP alleging it breached its fiduciary duty to an estimated 100,000 customers and ripped them off by selling in-house insurance policies with high premiums.
The plaintiff law firm has confirmed it will “imminently” file a lawsuit in the Federal Court of Australia against AMP’s life insurance arm and three of its financial advice subsidiaries, AMP Financial Planning, Charter Financial Planning and Hillross.
The class action is being bankrolled by London-based Woodsford Litigation Funding.
It will allege that AMP failed to act in the best interests of clients by allowing financial advisers operating under its licences to receive “commissions and other incentives” for recommending in-house AMP life insurance products, despite knowing they could obtain equivalent policies with lower premiums through competitors.
The suit is open to customers who obtained an AMP Flexible Lifetime Policy including death, total and permanent disability, trauma, income protection and business protection insurance from 2013 on the recommendation of authorised representatives of AMP FP, Charter or Hillross.
Shine estimated that as many as 100,000 former AMP customers may have suffered losses as a result of the failure to “provide objective advice” and could be eligible to participate.
No ‘corporate will’
The investigation follows the Federal Court handing a victory to the Australian Securities and Investments Commission last week in its dispute against AMPFP over alleged life insurance product “churning”.
The court ruled that AMP failed to show the “corporate will” to stop former financial adviser Rommel Panganiban from churning 49 clients into new AMP insurance policies and pocketing hefty commissions. It faces a penalty of more than $5 million.
A number class action litigation suits are in various stages of progress against AMP, including two for the company’s role in the fees for no service scandal uncovered by ASIC and the Hayne royal commission and another for alleged charging of excessive administration fees to superannuation fund members.
The wealth manager will unveil its half-year financial results on Thursday and is expected to provide an update on the pending sale of its life insurance business to UK-based Resolution Life, which has not received regulatory approval.
Unable to follow, try again