Watchdog ASIC Says AMP May Have Misled Customers

Reported in  Australian.news.com.au (27/8/06)

“The corporate watchdog , the Australian Securities and Investments Commission from its seven month inquiry has found that AMP, owner of one of the nation’s largest financial advisory networks provided inadequate and possibly misleading /incomplete advice to its customers pertaining to the costs of switching between different super funds which AMP may have certain conflicts of interest..

• The inquiry included investigation by ASIC of 300 AMP Financial Planning (AMPFP) client files selected from 30 advisers chosen at random between November 2005 and April 2006.
• It discovered that 45% of the client files had not disclosed a reasonable basis for advice when recommending a change in superannuation funds;
• AMP has agreed to review the advice it gave to 7000 clients, undertake a through review of its compliance and training systems, lift its standards of disclosure and improve its management of possible conflicts of interest;
• The enforceable undertaking offered by AMPFP commits the company to major compliance improvements and ASIC regards these commitments and the overhaul they represent as a positive development for the financial planning industry,” said Jeff Lucy, ASIC chairman;
• Mr. Andrew Mohl,  AMP chief executive has been a staunch defender of the commission-based remuneration structure of the industry, though it gives rise to conflicts of interest cited by ASIC;
• AMP also recently removed 11 industry super funds from its approved product recommended list citing a lack of demand. These funds do not pay commissions to planners.

Well, be wary especially if you are a unit holder of some funds, you might be approached by financial planner to switch from one fund to another. Certain unscrupulous financial planners might misrepresent and mislead you by giving incomplete picture/advice