AMP reaches final settlement sum in BOLR class action
AMP has announced a settlement decision in its Buyer of Last Resort (BOLR) proceedings, agreeing to pay $100 million.
This is double what the firm had made a provision for in its H1 2023 financial statement. In August, the firm stated it believed $50 million reflected a current assessment of the potential liabilities related to the advice practices that were the subject of the judgment.
On 27 September, it went on to announce it would appeal the action and engage in mediation.
The class action was filed with the Federal Court in Melbourne back in 2020 on behalf of advisers who had been authorised by AMPFP. The claim related to changes made by the firm to its BOLR policy in 2019. This had seen AMPFP cut its BOLR terms without notice from 4x recurring revenue to a maximum of 2.5x.
The verdict on the class action was issued by Justice Mark Moshinsky on 5 July ruling that the changes made by AMP with immediate effect were not authorised under the legislative, economic or product (LEP) provisions and “were ineffective”.
AMP said reaching a settlement does not mean an admission of liability.
In a statement to the ASX, the firm said: “The settlement is for a total of $100 million and is subject to the finalisation an execution of a deed of settlement and approval by the Federal Court of Australia.
“AMP made a provision of $50 million in its 1H23 financial statement based on the judgement of 5 July 2023.
"Today’s settlement covers the class action in its entirety, including where there has been no judgement.”
Alexis George, CEO of AMP, said: “This is an important step for our advice business and for AMP more broadly as it allows us to put this legacy matter behind us, which has impacted relationships with our valued advisers.
“We’ve worked very hard in recent years on rebuilding the relationship with advisers and we’re looking forward to working with them in the delivering of quality financial advice, at a time when Australians need it more than ever.”
AMP said it will communicate to the market regarding the third tranche of the capital return by the end of the year following discussions with the regulator.
AUTHOR
Laura Dew
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