Class action floated as AMP advisers lawyer up
AMP Financial Planners Association has stepped up its action against the wealth manager after 93 per cent of members voted in favour of taking legal action against the group.
Ampfpa CEO Neil Macdonald said, “AMP is on the record saying it is trying to right some of the wrongs of the past – it cannot right wrongs by doing the wrong thing by its own people.”
The association has surveyed member practices about the action they want to take and received a response rate of over 90 per cent. Of those who responded, over 93 per cent indicated they support legal action.
"To that end, ampfpa has arranged legal packs outlining the available options for its members and is seeking additional information from them," Mr Macdonald said.
“We are aware that tier one legal firms are prepared to run a class action against AMP and funders are available at very competitive terms. Our members intend to hold AMP accountable for the severe financial, reputational and psychological harm it is inflicting on its own advisers.”
On 8 August 2019, AMP announced that it intended to cull its adviser network and slash the amount it would pay under its buyer of last resort (BOLR) terms to exiting advisers from four times recurring revenue to a maximum of 2.5 times.
“This action was taken without consultation with ampfpa, without the required 13 months’ notice to advisers, and after AMP assurances that existing BOLR arrangements would not change,” Mr Macdonald said.
As recently as May 2018, AMP Financial Planning’s then managing director met with AMP practices around Australia to reassure them that prevailing BOLR terms would remain the same.
“Based on this assurance, many practices may have made a decision to stay on with AMP last year, rather than exercising their BOLR rights,” he said.
Ampfpa has prepared an issues paper on behalf of its members, as well as member questions for AMP. Ampfpa has invited AMP senior management to attend an afternoon meeting to be held later this month with advice practices staying on with AMP.
The association has also written directly to individual members of the AMP board of directors outlining ampfpa's concerns. This letter followed two previous letters that ampfpa sent directly to each individual member of the AMP board on 5 August 2019 and 7 August 2019, both of which were ignored.
“The response we received to the third letter came from AMP management and does not inspire us with much confidence,” Mr Macdonald said.
He said ampfpa objects to suggestions that the advisers currently being culled by AMP are those who will not be able to meet new compliance obligations or will not be able to transition to a fee-for-service practice.
“It has been reported in the media that AMP has identified practices that won’t make it through the transition because, ‘their business economics simply aren’t strong enough’. In our opinion, what this actually means is that AMP thinks they cannot profit from these practices and so is organising their exit. This does not excuse AMP from honouring the agreements it has with these practices and the BOLR terms that were in place before 8 August 2019.”
Mr Macdonald said ampfpa is aware that members are contacting their local members of Parliament and small business ombudsman offices in their home states to air their concerns.
“Several ampfpa members are actively pursuing these avenues,” he said.
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