AMP is in breach of its contractual obligations to its own planners because it has not given them sufficient notice of its changes to buyer of last resort and other arrangements, according to the AMP Financial Planners Association (AMP-FPA).
Because of this, the AMP FPA has declared it will be contesting the significant changes announced by AMP last week including the BOLR changes and moves which are likely to see the departure of a large number of advisers.
The Association has signalled that it will be arguing that large numbers of advisers had been induced into debt by AMP to buy books of clients from exiting AMP advisers at four times recurring revenue and that that debt had been funded by AMP Bank.
AMP-FPA chief executive, Neil Macdonald, said that the company was obliged to consult with the association over changes to the terms of BOLR arrangements and to also give members of the association 13 months’ notice of any change that would have a detrimental effect.
“AMP has done neither,” Macdonald said.
He also claimed that AMP’s pinning of BOLR to what it claims is a market value of 2.5 per cent is disingenuous because it ignores past practice and precedent.
“Advisers had to pay four times recurring revenue to buy into the right to service an AMP client book. That was the price set by AMP. It was never a market value. The adviser did not own the client book or any goodwill and would never have paid four times without AMP’s promise to pay four times when the adviser retired from the industry,” Macdonald said.
“This was AMP’s mechanism to attract and retain advisers long term. But now, AMP is wanting to keep the four times entry price for itself and only pay back 2.5 times.
“AMP has already broken trust with its own customers and it has now broken trust with its own people,” he said. “The reduction of the multiple applied under the BOLR terms is potentially disastrous to many advisers, particularly those who have given notice but have not yet been bought out.”