Court orders discovery of key AMP BOLR documents

The law firms conducting the class action on behalf of financial advisers against AMP Limited over buyer of last resort (BOLR) contracts have been ordered to pay a costs security of $1.5 million to enable them to obtain key documents covering the company’s changes to the BOLR arrangements and how they occurred.

The documentation filed by the law firms reference AMP Financial Planning having referenced the possibility of a “BOLR run” in its own pleadings.

Federal Court orders made just before Christmas reveal that the firms representing the advisers have sought discovery of key information from AMP Limited including all documents created or received in the period from 1 July, 2018, and 8 August, 2019, relating to any proposed or possible change to the BOLR multiple in the 2017 BOLR Policy.

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AMP is obliged to provide the documents on 31 March, this year.

As well, the firms are seeking all documents recording communications or consultation between AMP Financial Planning and AMP Financial Planners Association in relation to the BOLR Multiple between 1 July 2018 and 8 August, 2019.

Included in the documents being sought are those relating to “a decrease in the market value of register rights linked to ongoing revenue including in respect of grandfathered commissions and/or a ‘BOLR run’”.

The lawyers have also sought documents relating to the board meeting of AMP Financial Planning held on 7 August, 2019, and a copy of the minutes of that meeting, all board papers provided to board members for the meeting and all documents recording communications between AMP Financial Planning board members in the period 1 August, 2019, and 7 August, 2019.

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I trust that the BOLR documents will be fully disclosed and the varying multiples applied to different sources of revenue are noted for the public to critique and form an opinion as to why AMP Advisers may have selected certain platforms and products for their clients. Be careful what you wish for, especially when you cannot qualify and control what is discoverable. The public may also then be able to work out why so many AMP advisers were reluctant to move Licensees when they knew that the BOLR multiples they had secured were so far out of what the market was paying, they could not afford to move. It is interesting that when BOLRs are are no longer a floor for pricing that advisers are more mobile in teh market.

Nearly as conflicted as an Industry Super Fund employed Adviser getting nice pay from intra Fund Advise Fees? Lets see, if I was to work for Host Plus, what would I recommend?

AMP had been progressively removing the bias to AMP products built into BOLR long before 2018. The historical reason for above market BOLR rates was because AMP advisers weren't able to move and take their clients with them. AMP "owned" the clients. It wasn't adviser reluctance to move, it was adviser lock in. However the recent reduction in BOLR rates also coincided with a relaxation of this restriction.

All in all the recent BOLR changes are actually pretty well aligned with societal expectations. But not those of existing advisers. Greater disclosure may actually work in AMP's favour.

The Licensee always owns the client, as client fees must be paid to the Licensee. He/She who controls the money controls the client. We saw this with Dover when Authorised Reps were not paid because the Licensee was not there to pass on the revenue! While I saw the Licensee owns the client, in reality, the client owns themselves and it has been shown in practice that the cleitn will decide where they wish to receive advice and who they engage.

True, but with most licensees if an adviser leaves they won't block transfer of their clients to a new licensee. Most will actually facilitate the process, through release documents and bulk transfers. But not AMP. They had adviser contract clauses which prevented advisers from doing business with their clients after leaving AMP. There was no process to facilitate transfers to other licensees. This is what has changed in recent times. AMP is now giving advisers more freedom to leave and take their clients with them. Consequently their above market BOLR rates have come down.

thanks for the courteous exchange of information Anon - it's refreshing

Looks like Full Disclosure is an outsider with just enough knowledge to be dangerous.

I thought it was pretty well known around the industry that BOLR terms used to heavily incentivise the recommendation of AMP product above all else?

It was always an absolute indictment on the industry. Doesn't make it ok that AMP change the terms when they no longer suit them..

It is my understanding that AMP were happy to sell these books to new advisers joining AMP at a 4 times multiple. So they are happy to sell at 4 times but now not happy to buy back at 4 times?

AMP changing the buy back multiplier rate was one of the many commercial risks in the transaction. Other commercial risks include:
- Clients choose to switch to another provider
- Clients let their product lapse
- Clients die
- Regulatory change stops collection of adviser revenue on some product types
- Regulatory change forcibly cancels clients' products

There are many commercial reasons why an asset purchased for $250K could quickly reduce in value to $100K, even if the buyback multiplier rate was unchanged. There are also many reasons why it could increase in value to $1M. That's the nature of commercial risk. The people who signed up to this program were not signing up for salaried jobs. They weren't investing in bank deposits with a money back guarantee. They were investing in a high risk commercial venture which could generate large returns, or large losses.

For Full Disclosure and FD.
BOLR multiples are the same for all solutions provided under the available products on the list. Removal of bias to AMP only products of 4 times occurred maybe a decade or more ago. Just think it’s important to correct misinformation from posters who don’t know their subject. I personally was effected for many years by this but it didn’t alter one bit what products solutions I provided. I raised this for change years ago and they promptly recognised and changed it. they also changed their risk products to meet my needs from a BDM who wondered why I didn’t place much risk with them. A incredible response from AMP which you may find the time in the future to give credit where due. I also wrote a lot of OnePath risk as level premium as it compared very favourable in the market. However no commission was paid for the public xtra premiums above stepped. An abnormality I’m sure you would agree. So I was doing myself out of very very significant income being one of the top five country advisors writing their solutions and also the lower BOLR at the time. Both issues corrected years ago. Message is that you may find most advisors always put their clients best interests first and were not effected by laws saying we should. For some, that may have been the advanced training these advisors received from them and in many cases, it’s how we were raised.
Please be more informed in future than mislead others or dare I say, your clients.
Sadly the industry has lost a huge amount of experience, integrity and knowledge. Contrary to possible past intentions of regulators and fools without industry knowledge impacting massive changes, it’s hardly going to serve those in real need or any others, with lower fees. A major issue now and results are already evident in the industry and the nation will see massive under insurance and inferior products marketed

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