Ombudsman requested BOLR investigation in October

EXCLUSIVE: Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell requested ASIC investigate AMP in October 2019 – but the regulator said its hands were tied.

Correspondence seen by ifa shows that the ombudsman was concerned that AMP’s actions would have “an immediate and significant impact on the viability” of the large number of its advisers that were operating as small businesses and requested that ASIC review the matter.

But ASIC said that its hands were tied – despite a 2016 extension of the ASIC Act’s unfair contract term provisions to small business contracts, under which certain terms of a contract may be rendered void if judged to be unfair.

“A breach of contract or the use of unfair contract terms is not a criminal matter, and a contract is enforceable only by civil action taken by parties to the agreement,” ASIC commissioner John Price said in his reply to the ombudsman’s request.

“As such, ASIC has no regulatory role specifically in relation (to) unfair contract terms in small business contracts.”

Ms Carnell’s other concerns (as related in ASIC’s reply) included AMP transferring responsibility to advisers for compensation deemed payable as the result of the royal commission; AMP advisers being restricted from working in the finance industry despite being terminated; and a number of advisers being terminated in August 2019 with an exit date of 31 October, giving them “insufficient time to determine an appropriate exit strategy”.

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“As is the case with any contractual dispute we suggest the affected AMP financial planners consider seeking private legal advice as to any rights or remedies that may be available to them,” Mr Price said.

In July, ifa revealed that Ms Carnell had referred more than 60 AMP advisers to mediation following the “heartbreaking” write down of the BOLR agreements.

“It’s a lesson to everybody to read the contract, but for these financial planners, they were working with AMP for 15 to 20 years, and I think they just thought they were part of the AMP family,” Ms Carnell told ifa.

“It turned out that they weren't." 

Ombudsman requested BOLR investigation in October
BOLR investigation
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