Finance Finance News AMP adviser directed clients to a property company he secretly owned
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AMP adviser directed clients to a property company he secretly owned

Advice tainted.
Sarah Britt admitted an AMP adviser gave "tainted advice". Photo:AAP
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Bad news continued for disgraced finance house AMP on Monday when the banking royal commission heard that one of its financial planners directed his clients into property deals through a property company he majority-owned but had not declared to his clients or employer.

Counsel assisting the commission, Rowena Orr QC, said “advice of that nature is tainted, isn’t it? It may not be given in the client’s best interests but to advance the interests of the adviser”.

“Yes,” AMP compliance executive Sarah Britt replied.

The planner, Adam Palmer, encouraged property investments through self-managed super funds despite his knowledge in the area being “questionable”, an AMP review later found.

Mr Palmer directed clients to an employee of his property company known as Eddie, who sourced properties for them. The review found this chain of referral so powerful it “could not determine … that the clients legitimately sought advice on buying property through an SMSF”.

Mr Palmer had not documented any fees he received or “adequately managed the conflict of interest by placing the client’s interest ahead of his”.

He advised clients they could pay property development costs through their SMSF despite the fact that capital improvement for properties held in such funds was not allowed, the review found.

Quarter of superannuation lost

The commission also heard that bad advice cost one AMP customer 25 per cent of his superannuation balance.

The commission was told that, while AMP had since terminated the adviser, the victim and his wife, who also received inappropriate advice, had not been told of the issue, let alone compensated, two years after the advice was given.

The adviser, known only as Mr E, had allegedly been identified as giving problematic advice two months before the incident with the couple.

In November 2016, 11 months after Mr E joined an AMP affiliate as an adviser, a couple came to him wanting to improve the performance of their superannuation accounts.

The husband at that point had more than $140,000 in two superannuation funds, TAL Super and MLC MasterKey. Mr E advised him to consolidate both accounts in MyNorth Super which, unlike the other two funds, was owned by AMP.

The advice came despite Mr E’s knowledge that the fee to leave TAL would have been $16,493, or about 25 per cent of the money he had with TAL. The man proceeded and his total super balance came to just over $125,000 – down from $141,756 when he first came to see Mr E.

The man’s wife had $46,075 in Vision Super which was also rolled into MyNorth but with no fee.

Mr E told the couple they would make more in the long term through the change because the new fund would perform better. Mr E had claimed in his statement of advice that the move would result in a retirement balance of “approximately $1.3 million versus the TAL option of  $964,000”.

Ms Britt admitted that two months prior to the advice being given problems with Mr E’s advice had been identified and there was a high level of concern about “best interest” tests relating to his recommendations to clients.

Nonetheless he was given a “C” rating which allowed him to continue giving advice with some increased oversight and training.

In August last year the owner of the business for whom Mr E worked under licence from AMP recommended his sacking. But the couple have not been recompensed for their loss resulting from his advice and have net even been informed they received poor advice.

“I don’t think I’d argue [our response] was timely given we haven’t contacted them,” Ms Britt said.

Mr Palmer was also sacked by AMP.

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