September 14, 2016
The Australian Securities and Investments Commission (ASIC) has permanently banned a NSW adviser from providing financial services after he cancelled a number of life insurance policies and replaced them with new ones to increase his remuneration via upfront commissions.
The regulator banned Rommel Panganiban, of Bella Vista, New South Wales following surveillance which found he failed to act in his clients’ best interests or have a reasonable basis for advice, and that he had prioritised his own interests over that of his clients.
Panganiban was an authorised representative of AMP Financial Planning between 19 March 2010 and 12 September 2014, before becoming a representative of Lionsgate Financial Group from 29 September 2014 until 3 August 2016.
ASIC stated that between 4 February 2011 and 31 July 2014, Panganiban advised 49 clients who held life insurance via an AMP superannuation fund to cease those existing AMP insurance policies and replace them with new AMP insurance policies.
ASIC claimed he gave this advice without considering whether this was in the best interests of his clients and without advising them that he was able to simply transfer the insurance policies.
The regulator stated that by ceasing and replacing the insurance policies, rather than transferring them, the full rate of commission became payable to AMP Financial Planning and Panganiban’s remuneration was positively influenced by the upfront commissions he generated as a result of his advice.
Panganiban’s actions also exposed his clients to possible gaps in cover, changes in definitions and policy terms, policy exclusions and loadings and unnecessarily restarted the non-disclosure period stated ASIC.
The regulator said the repetitive nature of Panganiban’s conduct, his actions against the best interests of his clients and his motivation by greed, led to a finding that he was not of good fame and character.
As a result of the ban both Lionsgate Financial Group and AMP Financial Planning will be required to notify his clients of the ban. AMP Financial Planning alerted ASIC to Panganiban’s behaviour on 3 October 2014 and has written to his clients offering to review their advice.
Panganiban has appealed to the Administrative Appeals Tribunal (AAT) for a review of ASIC’s decision after an application on 9 September to the AAT for a stay of the banning decision and confidentiality orders was dismissed.
This action follows an earlier move in March in the Federal Court in which Panganiban moved to have ASIC provide him with client files and to have the regulator restrained from making a decision on a banning order. The action was dismissed in mid-May by the Court.