Brutal AMP may be on shaky ground says lawyer

AMP is not on the firm legal ground it purports to be with respect to Buyer of Last Resort (BOLR) changes and its efforts to characterise the issues as straightforward should not be accepted at face value, according to a lawyer retained to represent a number of AMP advisers.

The lawyer, Dan Mackay of Melbourne-based Mackay Lawyers & Advisers, has written an analysis of the BOLR situation which is being published in Money Management and within which he states that the manner in which AMP is acting is ‘brutal’ and where advisers are at risk of losing everything, important issues of equity arise.

“The announced changes by AMP regarding BOLR have been brutal in their potential impact upon some Advisers. It is highly likely that Advisers relied upon the security of the ‘4X’ BOLR put option when they purchased their businesses or client-books, in many cases borrowing amounts based on the 4X value,” he said.

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“The stark reality now, is that AMP’s unilateral revisions to the BOLR terms means Advisers may have negative equity in their businesses against their debt.  Their position might be further diminished by the effect of ‘lookback’ audits, as AMP accelerates years’ worth of ‘housekeeping’ in the aftermath of the Hayne Royal Commission.”

“Often misunderstood by laypeople (and many lawyers), equity is law ‘through the looking glass’. It is not concerned with what contracts say so much as what people do and did. ‘Black letter’ gives way to consideration of ‘all the circumstances’, including circumstances specific to each Adviser. Fundamentally, equity is concerned by what is fair,” Mackay said.

“Assuming for a moment that AMP has the ‘black letter’ legal right to reduce the BOLR valuation metric from 4X to 2.5X, should it be allowed to do so?” he asked. “In considering this question, equity might ask:  were Advisers induced by the promise and security of the 4X BOLR put option to buy AMP businesses, with loans from AMP Bank, at a price based on that 4X multiple?”

“If AMP says that practices are now worth less because they are riddled with compliance issues, should AMP have discovered and addressed them before a Royal Commission did?  Should AMP have made these risks clearer to Advisers earlier, even if it risked lessening AMP’s profits from them?  If AMP Advisers now risk losing everything because of changes to the BOLR policy, and AMP might profit from these changes, in all these circumstances, should AMP be allowed to rely on the changes to BOLR?” 




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AMP thought all the advisers would just take it, but they are learning that advisers bite back. Most of the industry associations are of course gutless lap dogs that cant even bark let alone bite...but us advisers ourselves have a lot of fortitude and guts and dont give up that easily. I wish my fellow advisers at AMP all the best, dont give up !

You guys advisors cheated clients for a number of years and the RC has unfairly slapped AMP severe penalties and the shareholders have suffered hugh losses as a result. Its time the advisors pay their share. No sympathy but justice here should prevail.

Dear David, not one single AMP Adviser lied to ASIC - that was done by AMP Management. I think you have the story backward.

That is the most ridiculous and generalised comment I've ever heard. You can categorically say that ALL AMP Advisers cheated clients?? Ridiculous. As a matter of fact, most of the Advisers that caused all this are out of the industry already and far wealthier than any other contemporary Adviser who is doing the right thing. They weren't Advisers, they were glorified salesmen. And to the comment about unfairly slapping AMP with severe penalties, are you serious? AMP lied to ASIC multiple times and condoned the behaviour of poor advice for many years, as it was benefiting them directly. Now that they've been called out, they're throwing Advisers under the bus. If you're a disgruntled AMP shareholder, then perhaps you should get out now while you can still get $1.80 for the units you hold. AMP will be hurting a lot more in the near future. Absolute dogs who will get what they deserve. I feel for all AMP aligned Advisers. Hang in there guys and girls, don't let the fat cats push you around! Any reasonable human being who knows the FULL STORY (unlike David Reems), can see that what AMP is doing is unjust and unethical on so many fronts.

I'll say that categorically all financial advisers are corrupt, self serving cheats, who are only interested in maximising their own income at the expense of their clients. To suggest that it was only a few individuals is complete ignorance. The whole financail industry is built on a corrupt culture and practices of making recommendations to clients based on the biggest return to their own back pocket. There is zero sympathy for any of these cheats, you're all getting your just deserves...

Well, for a start the expression is "just deserts" (rather than deserves). As for the rest of your post, that's a fairly unlikely analysis saying that every participant in the profession, or any other Industry for that matter, can be tarred with the same brush.

I’m guessing that you or someone you know has had a bad experience. Is that a generalisation or do you have the evidence to back that up Josh? I’d love to see the rationale behind your statement.

AMP will be punished for their unconscionable conduct.
Advisers do not let them use these standover tactics fight!!!

David Reems you are totally uninformed. AMP Corporate caused this damage in the RC and the planners are paying for it. Stick to your guns AMPFP, people’s lives are at stake here. And no I’m not a AMPFP planner but I feel for them and wish them the best.

BOLR is a privilege not a right!!!
Be grateful to be an AMP Planner
Remember the world does not allow you a living!!

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