AMP has been urged to commit to mediation by the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, as it moves to exit up to 250 financial planning businesses.
Carnell said over 80 AMP planners had told her office that they faced financial ruin as a result of AMP’s new exit terms.
Last year, AMP announced its buyback strategy had would see the exit of a significant number of aligned advisers and significantly reduced pay-outs from buy of last resort (BOLR) arrangements.
“Many of those planners who borrowed from AMP to buy into the business at a set price, now face losing their homes and their livelihoods, as the financial institution seeks to impose a three-year restriction on working as a financial planner,” she said.
“My office has met with AMP and although they signalled they were open to mediation, they have yet to confirm their participation.
“It’s critical these small business owners have clear information about their financial position before making any big decisions about their future. Mediation would be one way of providing that much-needed clarity.”
Carnell said the ombudsman had called on AMP to waive debts for those planners who faced AMP-imposed reduced buyback values.
“Small businesses in the financial planning industry have faced a great deal of turmoil in the aftermath of the Banking Royal Commission, with hundreds of planners bearing the brunt of brutal restructures and fire sales by banks and wealth funds,” she said.
“We remain concerned about a number of behaviours that may include the conduct of lookback audits, financial planning licensors shifting responsibility for client compensation payments to licenees, short notice periods provided to licencees exiting the business and restraint of trade provisions.”
Comments
A good article. There is much to be concerned about with AMPs behaviour and decisions.
Unconscionable conduct is a legal term I imagine will be much in vogue when these legal cases start to come to court.
The behavior of AMP is nothing short of disgusting. It just makes me feel sick that a large corporate can treat small businesses in this way. Where is the scrutiny of this behavior from Politicians and Media????????
The Politicians and Media are the ones pushing AMP to do this.
The middle and senior managers who have pushed advisers to the edge. These managers have moves from AMP and other large corporates to mid tire firms and have taken with them the same arrogant toxic self serving culture to these mid size licensees. The regulators and industry need to focus on this
I don't understand why advisers leaving AMP but continuing to work as advisers elsewhere, should feel entitled to BOLR. Why can't they take their clients with them and continue to grow their business and service their debt under another licensee? Is AMP preventing them from taking their clients? I thought AMP had relaxed that restriction. Are their lenders requiring debt repayment in full if they change licensee? What difference does it make to a lender if the advice business is ongoing and the security (usually the adviser's home) is unchanged.
The problem is that AMP coerced its advisers to buy orphined clients for a multiple of 4 times revenue with the specific clause in the contract that they would buy these same clients back at 4 times if the adviser chose to leave AMP or retire. Who would pay 4 times recurring revenue for clients without the guarantee that AMP would buy them back at that hugely inflated price. The problem is that AMP profited from selling these clients and then broke their contract to purchase these clients back.
The BOLR is really the only reason advisers joined AMP in the first place.
The senior staff at AMP might pass the FASEA ethic exam. But they are the most unethical bunch of corporate criminals since Bernie Madoff.
If advisers had a specific clause in their purchase contract to buy back at 4 times their purchase price if they leave AMP or retire, then what's the problem? It should be legally easy to enforce that clause. Although it does seem surprising AMP would have given a "money back guarantee" like this for a business investment purchase.
Nonetheless having such a clause in a purchase contract is quite different to BOLR. BOLR is:
- a separate contract unrelated to whether or not clients were purchased from AMP or acquired in other ways
- only available to retiring advisers, not advisers going elsewhere
- only applicable to clients the adviser still has at time of leaving, not all the clients the adviser originally bought
- subject to change in valuation methodology over time
Pretty much all of what you have said is incorrect.
- BOLR is not in the "purchase contract" it is a separate document
- AMP have (now) stated that BOLR is a policy, not a contract, and that will now be tested in the courts
- No difference in terms between retiring and going elsewhere. Why would there be?
- AMP induced Advisers to "buy in" at 4 times and BOLR was there as protection for paying such a high price. AMP set the multiple and now doesn't want to honour it from their side
- AMP Bank provided the practice loan in most cases (no conflict there huh?)
- Why is it surprising to you that AMP provided a guarantee? It was their business model, they made this up and continued it for years - until now.
You really should not bother commenting on the issues about which you know so little.
"I don't understand ....". Have a think about it - why would AMP want to allow Advisers to walk away with clients and once you have though about that, what could AMP do that is in the interests of AMP? Finance, exit audits...... they still hold the licence remember.
Anon
you know nothing !
Dino, as an ex AMP adviser who closely investigated many of these arrangements for myself before deciding the risk was too high and walking away, I may know more than you think. I was lucky to get some good advice from longer term insiders who knew the traps. I have great sympathy for those advisers who were a little more trusting/naïve.
That is why it concerns me those advisers are trying to use BOLR to get their investment refunded, but continue working as advisers elsewhere. It is a legal argument that AMP will easily defeat. It is an approach that seems to rely far too much on "the vibe" rather than a practical understanding of BOLR. At the end of the day I do believe some of the impacted advisers may have grounds for partial refunds due to unfair/unconscionable purchase contracts. That is where their efforts should be focused. Not BOLR.
So you're a Lawyer then with experience in disputes and litigation? Very unlikely, most probably just an opinionated pratt. Seriously, what would you know!
Is it not possible for some of you to have a polite conversation without resorting to personal slights?
It does nothing to advance the conversation and says a lot (not good) about yourself.
No wonder you hide behind anon and pseudonyms.
Is it possible? Maybe. However there are some amazingly silly comments posted here so sometimes it's just so tempting to deal with them as they deserve to be treated. Imagine the ignorance and arrogance of a person who is not a Lawyer dispensing an opinion on very complex legal issues. Forget your BOLR terms he reckons, go for unconscionable conduct. Far out Terry.
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