A number of lawyers have confirmed dealing with AMP financial planners over the operation of AMP Limited’s buyer of last resort (BOLR) arrangements, amid allegations that it has virtually “weaponised” its compliance approach to reduce pay-out amounts to particular advisers.
The lawyers have told Money Management that clients have sought assistance in addressing their issues with the BOLR contracts as they seek to exit their arrangements with the company, particularly those advisers who had taken out loans to purchase books of customers.
The lawyers said a number of advisers had found themselves confronted by allegations concerning their compliance records, while others had been asked to enter into strict confidentiality arrangements as part of their exit agreements.
Asked to comment on the issue, AMP said its BOLR offer was “available under certain conditions to AMP financial advisers who wished to retire or leave the industry”.
“We have governance processes in place to ensure that practices who apply for our BOLR offer meet eligibility criteria, which include a good track record of compliance and client service,” it said.
A number of the allegations against AMP Limited have been aired by commenters on the Money Management web site with some suggesting that a large number of advisers “are up to their ears in debt because they borrowed from AMP to buy books of AMP trails from AMP”.
Others have suggested that if the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommends strong action to outlaw the remaining trailing commissions sitting within the books, then AMP’s problems and those of advisers holding the books will be magnified.
However, senior financial services lawyer and the principal of Argyle Lawyers, Peter Bobbin said that notwithstanding the Royal Commission’s final recommendations it would be no easy task to change the nature of the contracts underpinning the BOLR arrangements.
He said that the making of the law necessary to make BOLR contracts illegal would be tantamount to nationalising something, and that a far more likely approach would be to grandfather current arrangements and make all subsequent arrangements unlawful.
Comments
AMP BOLR is only one part of this mess. What about other buyers of Practices who have purchased in good faith since FOFA commenced? If grandfathered commissions are indeed outlawed, think about how it leaves those purchasers. Many have tried to actively re-engage clients and many of these clients in legacy products that only offer trail commission within the product (think annuities) actually receive great ongoing service. At least taxi-drivers in Victoria received a token compensation package when an illegal ride sharing service harmed their businesses. Where is the compensation going to come from if legislation destroys good businesses?
The BoLR process was a disaster. I really feel for anyone about to undertake the same. Good luck to you, as you'll well and truly need it!
What nobody so far has realised is that AMP encouraged book transfer transactions at FOUR TIMES their value instead of the standard 1.5 to 2 times under the premise that you can grow the book and magnify your gains significantly in the process, and BOLR is the safety net to ensure that premium if they can't get it in the open market. They would then resell the book at FOUR TIMES value to the next adviser. Sounds pretty good except that AMP funded the loans for these books at FOUR TIMES as well value magnifying the cost to service significantly, and ensuring that AMP made a motza from advisers who purchased books and had to borrow to help facilitate the purchase. Now their books are only worth market value is AMP going to adjust the associated debts for each individual adviser? Just goes to show how little integrity this organisation has in ripping off advisers whilst selling it as a dream come true!
deepak. i feel you have demonstrated that you can twist anything the way you like and that is just about what has undermined the industry. if you dont know and pretend, then you ,mislead. As is the case of your comment here.
Oh I see. Perhaps you represent AMP me thinks... a white knight who has come to save an organisation that has no conscience haha. I think many financial institutions (AMP in particular as has become evident) have done a good enough job themselves of "misleading" the public and undermining their own industry throughout the whole Royal Commission don't you? Perhaps you are attempting to twist the facts, pretending and misleading by your comment in an attempted smokescreen. Regardless of that, please feel free to correct the error of my ways and tell me your version of the "facts".
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