A federal court judge has blasted troubled financial services group AMP for allowing its commission-hungry financial advisers to systematically rip off clients, ridiculing the company’s defence that there was just one “bad apple” and fining it $5.175m.

In a judgment handed down on Wednesday, Justice Michael Lee found AMP was “the right place” for greed and said it was arguable the penalty – which was more than Australian Securities and Investments Commission (Asic) asked for – was “an inadequate reflection of the seriousness of the conduct” exposed in the case, but the law limited the fine he could impose.

The Asic filed the lawsuit in June last year after the banking royal commission exposed AMP for allowing its planners to “churn” customers into new insurance policies when there was nothing wrong with the old one.

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