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Charter ‘backs down’ in exit fee dispute

A financial advice practice formerly aligned to AMP’s Charter Financial Planning licensee has left the group following a month-long stoush over a disputed PI run-off cover payment.

Western Australian practice Sound Life Financial Services has exited the AMP network to join non-aligned dealer group Synchron, following a transition to new ownership and disagreement with its former licensee.

Following the retirement of Sound Life founder Richard Duffield, advisers Thelma Jaekel and Jane Looker took the reins of the Albany-based firm and decided to switch licensees having experienced a “lack of support” during the succession process, the pair told ifa.

“We really needed help to transition the business. Richard was 69, retiring and his wife had cancer, and they didn’t give him any help, not even a phone call,” Ms Jaekel said.

“When we didn’t get that and said we were leaving we got lots of stuff thrown at us – free Statements of Advice and other things – it’s just not cricket.”

Undeterred by these alleged incentives, Ms Jaekel and Ms Looker stuck to their decision to switch licensees only to be told that they would be subject to PI run-off cover.

“AMP wasn’t even the [owner of the] licensee when the PI insurance policy was agreed to,” Ms Looker said. “It was just an exit fee.”

Having engaged Synchron to negotiate on their behalf, the two new directors were able to continue focusing on the day-to-day business while a dispute for the practice raged between the two dealer groups until Charter subsequently “backed down”, according to Ms Looker.

Synchron director Don Trapnell told ifa he received a dealer-to-dealer agreement from Charter releasing the practice and its clients.

More broadly, Mr Trapnell said the case is reflective of the ‘Hotel California’ problem facing the financial advice sector whereby some advisers are restricted from free movement.

“Licensees who try to build fences around their advisers by putting unrealistic clauses in the dealer-to-dealer agreement or by charging an exit fee are saying something to their existing advisers about how they do business,” Mr Trapnell said.

“If you love someone set them free and if they love you they will return.”

An AMP spokesperson confirmed that Sound Life is a former authorised representative of Charter Financial Planning and has left the network.

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