AMP Financial Planners Association (ampfpa) will be contesting changes announced by AMP to its buyer of last resort (BOLR) terms.
Ampfpa chief executive Neil Macdonald said that the wealth giant was contractually obliged to consult with the association over changes to the terms.
“AMP is contractually obliged to consult with us over changes to the terms and also to give our members 13 months’ notice of any change that will have a detrimental effect on them. AMP has done neither,” he said.
Mr Macdonald said the MP changing market value of the BOLR to 2.5 times from four times was disingenuous.
“Advisers had to pay four times recurring revenue to buy into the right to service an AMP client book. That was the price set by AMP. It was never a market value,” he said.
Mr Macdonald said that advisers did not own their client book and would never have paid four times without AMP’s promise to pay four times when the adviser retired.
“This was AMP’s mechanism to attract and retain advisers long term. But now, AMP is wanting to keep the four times entry price for itself and only pay back 2.5 times,” he said.
The wealth giant has already broken trust with its customers said Mr Macdonald and now it was breaking it within its own people.
“The reduction of the multiple applied under the BOLR terms is potentially disastrous to many advisers, particularly those who have given notice but have not yet been bought out,” he said.
Advisers who were on the brink of retirement would now be forced on Centrelink benefits when they exit as a result of the change said Mr Macdonald.
Many advisers had purchased the books through loans and repaying them would be extremely difficult for some, said Mr Macdonald.
He added: “We are concerned about the potentially devastating flow-on effect of the financial loss in terms of the mental health of advisers, their families, and their staff, as well as the impact on their clients. What will happen to the clients of the advisers that AMP forces to move on, advisers who cannot, due to AMP-imposed restraints of trade, work in the financial services industry for at least three years?”
Mr Macdonald was also concerned by the wealth giant’s intention to divest itself of advice practices and introduce digital solutions which would mean consumers would no longer be able to source locally based personal advice tailored to their needs.
“In our opinion this would reintroduce a sales culture and that is a very poor outcome indeed for consumers and a very poor outcome for Australia,” said Mr Macdonald.
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
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