Class action filed against AMP on BOLR

29 July 2020

AMP Limited has confirmed receipt of a class action filing from AMP financial planners. 

The company announced to the Australian Securities Exchange (ASX) today that a class action had been filed against AMP Financial Planning Pty Ltd in the Federal Court in Melbourne. 

It said the proceeding had been brought on behalf of certain financial advisers who are or had been authorised by AMP Financial Planning. 

It said the claim related to changes made by AMP Financial Planning to its Buyer of Last Resort policy in 2019. 

The company said it was confident in the actions it took in 2019 and would defend the proceeding accordingly. 

In a statement issued shortly after the AMP ASX announcement, the Advisers Association (TAA) said it was supportive of its members, following the filing of an 'open' class action against AMP Financial Planning (AMPFP) on behalf of AMP financial planner members by Corrs Chambers Westgarth in the Federal Court of Australia.

TAA chief executive, Neil Macdonald, said many members, both those exiting and those staying, had joined the class action, which follows AMPFP’s decision to reduce its adviser network and cut the amount it would pay for their businesses under its Buyer of Last Resort (BOLR) terms, without notice, from 4 times recurring revenue to a maximum of 2.5 times.

“We would have preferred, and we continue to prefer, that AMPFP work with the association to negotiate fair and reasonable outcomes for all members,” he said. “This is obviously imperative for those who are exiting, but it is just as important to those who are staying, so that they can continue to provide Australians with affordable access to financial advice.”

The Australian Small Business and Family Enterprise Ombudsman has referred over 60 BOLR-related cases for mediation, after receiving over 100 complaints from AMP financial planners related to the BOLR changes. ALP Senator Deborah O’Neill has called for a review of AMP’s behaviour. 

Mr Macdonald said many members had bought businesses from AMPFP at 4 times recurring revenue, on the promise that AMPFP would acquire their businesses back on the same multiple when they leave, a key plank in AMPFP’s ecosystem.

“These are businesses that were valued by AMPFP for lending purposes at 4 times recurring revenue and in most cases were funded by AMP Bank loans or via another tripartite banking arrangement, again at 4 times recurring revenue,” Macdonald said. “In many cases advisers had to put up their family homes as security and are now at risk of losing them. Many of our members stated they had little choice but to join the class action."




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The AMP had sought to hurt its planners in a premeditated fashion. They don't care about there advisers and this is proven by AMP as part of the FSC lobbying government for the removal of grandfathered commmissions and undermining them along with advisers in the industry at every turn. A disgraceful act whihc then was used to lower the BOLR offer. Advisers have had a gut full of swine like AMP and others. Advisers should not affiliate themselves with swine like AMP and where appropriate, move clients away from AMP, MLC CFS, Onepath ISN. These are untrustworthy swill. I am with the advisers against AMP and others like it.

About time!! I know advisers who stuck with AMP only because of BOLR and then had the table cloth ripped from under the china.

Let the games begin !

Next all exiting AMP advisers should also mount a class action against further practices that AMP adopts which are all also ethically wrong. Having advisers are refunding 100% of fees for no advice - however AMP is keeping their percentage of adviser fees charged on these fees. AMP advisers association are charging a full year of member fees when the adviser has already left the association - instead of refunding the period of unused membership. AMP are charging full year of PI insurance premiums when the adviser has already cancelled PI insurance - instead of only charging a pro-rata premium. The harsh treatment advisers receive when exiting which is delayed constantly only aimed at reducing AMP payout obligations - Also reversing their so called loyalty bonus which relates to the prior year -when exiting. And the list goes on!!!

The membership fee and PI costs both move into run off ie members stay a member of the association until after they receive their deferred payment from AMP typically at least 12 months later than the initial payment. The balance of the PI insurance provides run-off cover for no additional charge, which is considerably cheaper than what is available in the market. Not sure what the loyalty bonus you refer to is, if you are a member please give me a call.

Hit and run by AMP on its Planners.

So from doing over the public to now doing over their advisers. It seems that even a change of management and board members can't change the companies culture....profit at any expense....about time the government jailed some of these financial services mangers and or board members to get their attention, at the moment no accountability leads to this very outcome.

AMP have alienated their customers, their workforce (via the promotion of a guy who sexually abused a female) and via constant restructures and of course are trying to send their planners out of business/broke. This company is not only morally bankrupt, it's only a matter of time before they go under financially...and they paid millions for a guy to do this in the space of 18 months to help them on their way to oblivion.

Out of interest....do people with old disposable cameras have the right to sue Kodak because when they bought the camera there were plenty of places to get their pictures developed and now aren't? I think some advisers are genuinely getting to raw end of the stick here BUT the entire industry has been dealt significant and game changing blows. I'm sure there was a time when AMP's multiple of 4 made perfect sense...probably when FP practices were fetching multiples of 5-6. At that point, it was, as the name suggests,an arrangement of last resort, a backstop if you wish. If the entire market has moved, and FP practices simply aren't fetching those multiples anymore why would AMP and their shareholders agree to overpay? The fact that some people borrowed against their home....well.....lots of business owners borrow against their home. Some businesses thrive and others don't...admittedly this situation is more systemic but ultimately many industries and companies have been impacted by external factors over time that change their value...be it a Royal Commission, Competition, Technology Disruption or just some nuff nuff in government wanting to make a name for themselves....To be clear, I have no vested interest in this....more a case of devils advocacy.....perhaps a line in the sand approach....

Reply to JiminyBillyBob
The reason this is different is because there was an agreement in place.
The agreement was what it was, including providing adequate notice of the multiple was changed. This did not happen. That's the issue

Extra detail for JiminyBilly Bob. I think a crucial detail is that AMP were encouraging advisers to buy further client bases under the 4 times arrangement right until they changed the terms with no notice. Yes, the financial planning environment was changing and everyone knew that but AMP advisers had their terms changed without any notice and 5 seconds after AMP was actively selling client bases to their advisers under the old terms. Since then, AMP have issued many motherhood statements without backing them up with action but then that is how they operate at all levels. No accountability at all levels is the disease that is/ will cripple them.

reply to JiminyBillyBob- Everything you outline makes perfect sense JBB, however AMP were still selling books of 4 x prior to the announcement! Let that one sink in. AMP bank was the bank you had to use at inflated interest costs and a 3 year constraint to trade on exit- ie not working in the sector at all. So the 4x wasn't market rates as the conditions on exit were not market aligned either. Remember the 4 x was on purchases from AMP as well- I know I purchased from them at 4 x and are still holding a loan based on 4 times. Things would be different if AMP outlined this and adjusted borrowings, decreased licensee fees, reduced interest rates, had a prolonged period to adjust, aligned with legislation dates on GFR, didn't turn off insurance trail on underwritten retail risk, didnt over pay a CEO, didnt promote a known sexual harasser, didn't act unethically. The relationship between the planners and AMP was/is supposed to be a partnership. Most planners feel that they are the abused in this relationship.

This class action MUST be successful.
AMP MUST lose and MUST be made to retract their position and to compensate accordingly.
AMP's morals and ethics are shot to pieces and the respect as an organisation is finished.

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