Business as usual as Clayton Utz reps AMP in ASIC case
Financial Services July 2, 2018 1:11 pm By Christine Caulfield | Melbourne

Clayton Utz, the law firm that faced scrutiny over the independence of a report it authored for AMP, is representing the wealth manager in ASIC’s case over so-called insurance churning.

AMP’s financial planning unit was hit last Wednesday with the enforcement action by the corporate regulator, which alleges its advisors collected higher commissions by churning over life insurance policies for existing clients.

The company notified the court on Thursday that Clayton Utz would be acting for it in the litigation.

The firm penned a report for AMP’s board following an investigation into the company’s fees-for-no-service practice, which was the subject of damning revelations heard at the Banking Royal Commission.

AMP General Counsel Brian Salter was terminated in April over what what the board referred to as the “extent of the interaction” between him and Clayton Utz’s partner Nicholas Mavrakis in preparing the report, which was later presented to ASIC as independent.

The Australian Securities and Investments Commission is separately investigating the fees-for-no-service scandal and misrepresentations AMP made to the regulator. It is not known which firm is representing AMP in that probe, although King & Wood Mallesons was recruited by the company’s board to conduct an investigation of the report in the wake of the Royal Commission hearings.

The Royal Commission heard the report — which is not the subject of the investigation –went through 25 drafts and that Mavrakis and Salter exchanged hundreds of emails over its wording.

The Board, including ousted AMP chairwoman Catherine Brenner, was “unaware and disappointed” to learn of the “the number of drafts and the extent of the interaction” between Salter and Clayton Utz in the preparation of the report, the company said in April.

AMP later said that the back and forth between the GC and the law firm “has been overstated”.

The report was beyond reproach, and Clayton Utz made no alterations that it did not agree with, AMP said in a May submission to the Royal Commission.

“The report is an uncompromisingly direct 87-page review of the conduct of the advice business in relation to fee for no service matters. It makes findings in respect to current and former AMP employees and the systems, governance, culture and process surrounding AMP’s advice business,” the company said.

“The Board were not aware of the nature and extent of the interaction during the preparation of the report. There is also no evidence that Clayton Utz made any changes to the report that they did not agree with or that they do not stand behind the report.”

Clayton Utz chief executive partner Rob Cutler said at the time the firm welcomed AMP’s comments.

“It is disappointing that it has been misreported that Clayton Utz was in some way involved in misleading ASIC. That is simply not true,” Cutler said in a statement.

 

 

ASIC’s latest action alleges AMP’s financial planners earned “substantially higher commissions” after advising clients with existing life or other insurance policies to apply for new policies whenever they sought to change coverage.

“ASIC alleges that certain AMPFP financial planners engaged in ‘rewriting conduct’ – which is providing advice that results in the cancellation of the client’s existing life, TPD, trauma and/or income protection insurance policies and the taking out of similar replacement policies by way of a new application rather than by way of a transfer,” the watchdog said Wednesday.

A spokesperson for AMP said last week it had been cooperating with an ASIC investigation of the matter, which began in 2014.

“AMP will carefully consider ASIC’s pleadings and file its defence in due course.  In the meantime, we will work with ASIC to agree a timetable for the progress of the proceedings,” the spokesperson said.

A case management hearing is scheduled for July 20 in the Federal Court.

The case is Australian Securities and Investments Commission v AMP Financial Planning Pty Ltd.

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Christine Caulfield

Christine Caulfield has been a journalist for 18 years. She was most recently the Co-Managing Editor at US legal news publication Law360. Prior to that she worked as the County Court reporter for The Herald Sun. She is Co-Founder and Editor of Lawyerly.