Home / Life Insurance / AMP Financial Planning hit with two new class actions
3 August 2020
AMP Financial Planning was hit with two new class actions last week, coming under fire from both its adviser network and buyers of its insurance products.
AMP issued statements to the Australian Stock Exchange acknowledging the filing of each of the new legal proceedings in Australian courts.
AMPFP says it will “defend accordingly” a class action brought by Corrs Chambers Westgarth in the Federal Court.
That action comes after AMPFP terminated the business of hundreds of advisers last year and lowered the amount it would pay for their businesses, without notice, from four times recurring revenue to a maximum of 2.5 times.
Many advisers bought businesses from AMPFP at the higher payment rate on “the promise” the businesses would be acquired back on the same multiple when they left, Advisers Association (TAA) CEO Neil Macdonald said.
Shine Lawyers has filed a separate class action against AMP Life, AMPFP and two of its subsidiaries, saying clients were hit with excessive premiums and deserve to be compensated.
Shine alleges AMP Life knew of gains made from inflated insurance sales by AMP financial advice licensees and says hundreds of thousands of Australians who thought they were getting objective financial advice were instead “ripped off”.
The action claims advisers received commissions and other incentives for recommending insurance through AMP Life, while knowing their clients could obtain equivalent or better policies with lower premiums through other insurers.
AMP “behaved in a way that was unfair and illegal,” Shine Class Actions Practice Leader Craig Allsopp said.
Shine also plans to file class actions against BT and CBA in coming weeks, and says more than 500,000 Australians who were allegedly charged excessive insurance premiums could be eligible to join one of its three lawsuits.
“The sheer number of people affected by these premium rorts shows we’re not just talking about a few bad apples here but a systemic misconduct in the industry,” Mr Allsopp said.