The head of AMP’s adviser association has confirmed that a major commercial law firm will soon lodge a class action against the wealth giant for failing to give advisers adequate notice before writing down their client book values under BOLR contracts.
The Advisers Association chief executive Neil Macdonald told ifa that Corrs Chambers Westgarth was running the action on behalf of over 100 former AMP advisers who had been terminated following a drastic shake-up of the group’s wealth business late last year.
“Our understanding [is] it’s imminent, we believe the things that need to be done to lodge it are pretty much there,” Mr Macdonald said.
Mr Macdonald said the legal argument to be made by the firm would centre around “contractual change for adequate notice”, and whether AMP was required to give a year’s notice to affected advisers before any write-downs of business values could come into force.
“There is a clause in the contract and it basically says that if there is a detrimental change [to values] AMP has to give 13 months notice, [and] advisers can give six or 12 months’ notice to exit before the new terms come in,” he said.
“There is a separate clause that says ‘subject to the above, if it’s economic, legislative or political changes then AMP can make changes’, but the intent is that that was only ‘subject to the above’, which is if it's detrimental they’ve got to give notice.
“That would be the core argument – they might think they’ve got the right to change [terms] unilaterally whenever they feel like it, but obviously no one would sign up to a contract like that.”
The changes to AMP's advice arm in August 2019 saw the group reduce guaranteed values in its BOLR contracts from four times to 2.5 times revenue, as well as terminate 250 planners that were no longer profitable.
Mr Macdonald said the mediation process between terminated advisers and AMP, which had so far seen over 60 advisers referred through the Australian Small Business and Family Enterprise Ombudsman, had had mixed results and been marked by delays.
“The mediation seems to have taken a long time – the ombudsman initially said they’d agreed to do it in November and December , then it was pushed back to January, and still not everyone has been through it and we are six or seven months down the track,” he said.
“The other thing is a number of people have decided it’s not worth progressing because based on what they've heard, it’s not going to be useful. AMP may be making some concessions but I don’t think they’re making many.
“There’s been quite a lot of emotional distress as well because some of the advisers have been there for 20 or 30 years and never had complaints, never had a failed audit.”
Labor senator and member of the parliamentary joint committee on corporations and financial services, Deborah O'Neill, has asked ASIC to investigate AMP's treatment of advisers, with a report due this week as ASIC fronts the committee for an oversight hearing.
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