The Adviser Association chief executive Neil Macdonald told ifa that advisers who had enacted their BOLR terms were subjected to “binary pass or fail” audits regardless of the client detriment attached to any breaches contained in a file, and were not given the opportunity for independent oversight or appeal of the process.
“The process is the auditor comes in and says ‘that file fails’ and it then goes to a committee to decide whether the consequences are going to be applied or not,” Mr Macdonald said.
“Effectively, the planner’s PM or regional manager put their case to the committee, which is essentially AMP senior management. Our concern is, is that a reasonably independent process?
“From our perspective, we’ve said there needs to be procedural fairness in that — the planner should have the right to representation and have the right to appeal.
“I think if somebody is going to lose $2 million, they should be able to represent themselves or have some independent representation there.”
The terms of advisers’ BOLR contracts meant AMP reserved the right to pay nothing for an adviser’s client book in some circumstances where a high percentage of their client files had failed an exit audit.
A spokesperson for AMP told ifa that the BOLR audit process is designed to ensure advisers receive “fair appropriate valuations based on the quality of their business and fulfilment of their service agreements with clients”.
“AMP works with advisers during the process, providing the opportunity for advisers to improve their BOLR outcome by fixing issues,” they said.
“There is also a process for advisers should they wish to have their audit reassessed and present additional information.”
But Mr Macdonald said the audit process could see client files fail for minor breaches such as not including a financial services guide in the file, and for breaches dating back as far as 2008.
“Our view is that AMP should be looking at files from 2018 onwards, because the ones prior to that were picked up by their lookback program,” he said.
In addition to the changes to BOLR values from four times to 2.5 times annual revenue in August 2019 — which were being contested through a forthcoming adviser class action — AMP could also vary the price paid for a client book if they did not judge some revenue to be recurring, which Mr Macdonald said had caused further issues since the removal of grandfathered commissions.
Around 500 advisers had left AMP in the last 18 months, and more than 150 of those had raised concerns with The Adviser Association around the exit value paid for their business, Mr Macdonald said.
As part of sweeping changes to its advice business, AMP had also terminated 250 advisers that were deemed “lower profitability”, according to comments from Labor senator Deborah O’Neill earlier this year.
Audit failure rates on the rise
The wealth giant has reported that since the new commercial terms were implemented in August last year, close to 80 per cent of advisers have received their full BOLR settlement, with no discount applied. But an AMP spokesperson did confirm the pass rate had “marginally” declined on the 12 months prior.
Mr Macdonald said there was no doubt that “more advisers were failing” the exit audit process since AMP had reset its commercial terms in 2019, in what many advisers were calling “the weaponisation of the BOLR audit process”.
“Generally speaking, when you are going to go BOLR, it’s your choice, so you start tidying up your records, you align your service packages, you do the things you need to do to exit as efficiently as possible,” Mr Macdonald said.
“This group of people, because they weren’t planning to go, are caught by that.”
With AMP able to legally argue that audit failure constituted a breach of an adviser’s BOLR contract, it was possible those who failed their exit audits would not be eligible to join the class action being run by Corrs Chambers Westgarth, he added.
“Our view on the multiple change hasn’t changed since September, which is that the best possible outcome for our members was to take legal action against AMP with the class action,” Mr Macdonald said.
“What we’re trying to get for the exiting planners is if there is a payment which is reducing the BOLR by more than that, to allow them to continue to participate in the action — so, if there’s other reasons why it’s fallen, what are those reasons?”
This whole unfortunate situation is a salient reminder that ALL licensees have the ability to use weaponised compliance for their own commercial advantage, and any promises made by prospective licensees are worthless. The only way to remove this risk is self licensing.
All AMP management need to undertake the professional ethics course they might learn something about themselves this is disgusting. I’ve been a fin adviser for 36 yrs and this is about the worst I’ve seen. I’m not an AMP adviser but feel deeply for what they are going through.
Liar liar pants on fire AMP….you would not know the truth if it hit you in the face. You believe in your own lies and have brainwashed yourself to think what you are doing is ethical. You should all hang your head in shame, including Mr Ferrari. Shame on you!
When the AMP spokesperson says “There is also a process for advisers should they wish to have their audit re-assessed and present additional information.” – I assume they’re talking about the ability to request a second audit? But then AMP policy says they use the average of the two results. So if you failed 100% first time around, e.g. FDS’s had a typo in them, and you reissued all FDSs according to the legislation without the type, you would then get a perfect score on your second audit. BUT according to AMP that gives you 50% average result, which means a massive discount on the contracted valuation they have to pay you. Oh, but because the files are now fully remediated, AMP can onsell them at 100%….. Nice little earner for AMP. I wonder if any senior execs have a bonus KPI dependant on the amount of profit they’re making on these transactions….?
The same files aren’t audited twice. If an FDS is inaccurate, the contract with the client should cease and the revenue reduced to zero. That’s the law, not AMP who in many cases have allowed remediation and have paid for the file.
AMP stands for, All My Payments…gone.
I am sure the exodus will be double in 2021 – Only reason advisers haven’t left is that they are now stuck with a business that is basically worthless to sell… Good on you ASIC, AFCA, AFA for doing sweet FA for all advisers .. If we knew this was coming 8-% of advisers would have left 5 to10 years ago. Covid is nothing compared to what the Government has done to this industry.
Suddenly Neil and the team are interested in BOLR audits AFTER and exiting adviser brought the issue to the attention of ASIC! Neil and the team are only acting on this AFTER the media reported on reports made to ASIC.
AMP would of course then be reviewing the files of all clients that it buys back and remediate get appropriately, then on selling the files at the reduced value yeah?
Nah
Is this a case of Orwellian double speak and AMP using its one-sided contract terms to their utmost or is it true that 80% of BOLR cases are getting a ‘full settlement’? If only 20% have issues, then that is less than I would have expected. Does anyone know?
I believe it is well less than 80% getting what they expected. AMP would be stating that “full settlement” is based upon their reduction in value from these sham audits.
AMP spokes person says “80% of advisers have received their full BOLR settlement”. This is CERTAINLY not the case. Did they mean 80% DIDNOT received full BOLR….hmmm. I encourage AMP to release these statistics to the public and ASIC. Then we will see who is telling the truth….sorry they did lie to the regulator countless times, so why is it any different now. Please don’t believe anything AMP’s says.
If you don’t believe what they say why ask them to comment? You’re probably an adviser aren’t you?
I’m going through my audit right now. I wasn’t terminated without notice or without cause, so I’ve been lucky enough to spend time checking and remediating my files before AMP auditors descended on me. And yet I STILL have one file that AMP want to ‘fail’ because back in 2007 (when I was fairly new and didn’t have any admin support), I didn’t collect a client signature on my office copy of the SOA. Everything else is squeaky clean, including client signatures on all application forms, subsequent advice documents, and all reviews and FOFA obligations, and yet the AMP spokesperson above seems to say that this would be evidence of a poor quality file!
I’m fighting them of course, as it isn’t even a requirement of their own policy to keep a signed SOA on file. But I wonder how many other planners didn’t know how to fight such ridiculous fails BEFORE they get issued as the final audit result. Because the financial impact of any such fails can be catastrophic, with AMP effectively reducing even further the contracted valuation amount they have to pay exiting planners if they ‘fail’ more than 4 files. Don’t forget, most of us exiting now have to rebuild our retirement plans from scratch, and many are leaving in net debt – owed of course to AMP Bank! Thanks AMP!
most of this content is factually incorrect. Neil McDonald may well have been quoted but he is out of touch with the current position. Perhaps that’s because AMP cut the funding to Neil’s Association and he’s feeling a little bitter.
Dear David Akers, please provide your factually correct data
Then what are the facts?
AMP are a disgrace.
I have never seen such vitriolic persecution for commercial gain.
The brand is so damaged by their own corporate greed it is falling apart day by day.
They are prepared to do anything to anyone without conscience or concern.
This process has been occuring since at least 2018 and was also done to impact employed Advisers. The AMP owned business I worked for had Advisers targeted in this way, to allow termination without recourse. We were also aware of AMPFP practices being targeted with audits to achieve failed audits where they had recieved A rated audits for all previous Audits. These Audit results generally had no basis in truth. AMP is the most unethical Financial Planning buisiness.
So here you have it. A conflation of self interest by AMP, poor incompetant mangement drving the value of this once great company into the ground with no real financial costs to the now former executives or a clawback of their bonuses while at the helm. Assisted by legislation yet to come in on grandfathered commissions from 1 January 2021 yet retrospectively applied to all advisers with the blessing of incompetant leadership of ASIC, the AFA, FPA and a vile treasuerer and government who simply wants to look after the big end of town and cares not for small business. Yet these same fools in the Liberal party are now dragging their feet on an independent body against corruption at the federal level….anyone seen the Godfather lately….sure these AMP executives and other minions have.
As a licensee for thirty years I am so annoyed to see how these advisors are being treated you had their loyalty for years happy to take there business but you are treating them unfairly give them what they deserve
Yeah good… if you fail, unlucky!