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”.
“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.”
[quote=Anon]While you have the Corps Act open I suggest you look up the definition of “financial services”. I suspect you will find it relates to services provided to consumers. It doesn’t cover commercial arrangements between service providers such as AMP and its advisers. This whole issue is nothing to do with ASIC.[/quote][quote=Anon]While you have the Corps Act open I suggest you look up the definition of “financial services”. I suspect you will find it relates to services provided to consumers. It doesn’t cover commercial arrangements between service providers such as AMP and its advisers. This whole issue is nothing to do with ASIC.[/quote]
The Mr Wallis who chaired the Wallis Committee which in 1997 recommended the abolition of the agency model, to put AFSLs between adviser and product manufacturer, was the CHAIRMAN OF THE AMP BOARD. There was no way his recommendations were going to be adverse to AMP. And Wallis abolished the ISC and replaced it with ASIC & APRA. Do you really believe ASIC wants to address BOLR!
Most advisers who signed unsustainable one sided contracts with AMP did so because the potential rewards of a ready made client base with a 4 x BOLR rate were so tempting. It was a high risk investment which yielded high returns for those that timed things well.
Others are now learning about the potential downside of high risk investments.
other dealer groups have unfair contracts in place. – its just not AMP.
Yes, a person with contacts to many advisers told me the larger the licensee the worse the contracts and the less the licensee thinks that they need to stick to their part of the agreement.
Isn’t there an argument to suggest that the actions of AMP did not comply with Section 912A of the Corporations Act and specifically the obligation in Section 912A(1)(a) to “do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly”.
Therefore, wasn’t there an option for ASIC to take action on the basis of a breach of the Corporations Act. After all, Section 912A(1)(a) is the basis under which ASIC were able to take action against licensees for the fee for no service issue, which is ultimately a contractual matter between clients and their advisers.
While you have the Corps Act open I suggest you look up the definition of “financial services”. I suspect you will find it relates to services provided to consumers. It doesn’t cover commercial arrangements between service providers such as AMP and its advisers. This whole issue is nothing to do with ASIC.
We had a contract and we did read it and we did have legal read it, but AMP unilaterally changed it. The contract is not worth the paper it is written on. AMP will do what ever they want.
Sounds like you didn’t read the bit that said “AMP has the right to unilaterally change it”.
Have you seen the contract? If so, could you kindly refer me to the page that says unilaterally they are allowed to change the contract (unfair contract terms). If not, I would not be making comments then!
Perhaps you and AMP management should do the ethics course they got all planners to do. After all if it is legal it does not make it ethical.
I’m sure the AMP lawyer will be happy to refer you to it when the case gets to court. But the fact AMP planners are trying to win their case via appealing to “the vibe” in the public domain, suggests they know in their heart of hearts they signed high risk contracts which could come back to bite them.
BTW I am a planner, and have completed the Ethics course and FASEA exam. I also completed training in investments and law as part of my training to become a planner. That is why I turned down an offer to purchase a client book at AMP some years ago at a clearly ridiculous price of 4 times revenue, which was derived from an obviously unsustainable BOLR rate of 4 times, which was never contractually guaranteed. The whole thing shrieked high risk.
It is not ethical for any investor to knowingly undertake a high risk investment and happily pocket the profits if things go well, but expect to be compensated if they don’t. Anyone purporting to be a professional investment adviser should have been able to see the risks of the AMP offer a mile off.
AMP planners have a class action going where the solicitors are running on a slightly more complex argument than “the vibe”. Don’t let they truth get in the way of your story but each to their own. Which side will win the legal dispute is obviously unknown at the moment but don’t talk about something you know nothing about.
I noticed you have done the ethics course, FASEA exam and therefore are a planner. This doesn’t make you a solicitor
So your not a lawyer but an adviser. It sounds like you believe that AMP did not do anything wrong when charging their advisers 4x to buy a register brokered via AMP Bank and then claim economic change and reduce the multiple, to merely benefit themselves. This sounds like a scam or perhaps even a pyramid scheme where everyone on top of the pyramid is a winner except the poor old adviser at the bottom who gets trotten on along the way and crushed when the pyramid finally collapses. It’s called morales and values.
Oh dear. I have to agree with Kate Carnall – READ the CONTRACT ! I have known a lot of AMP advisers over the years. Many saluted the AMP sun every morning. All were keen to tell me about their wonderful security – BOLR. “When I asked if they had legal advice, all said no need – AMP would look after them.
Which is really interesting – we were trained to ask clients – “WHAT IF?
But to be fair, the big insurers with tied agencies had a bad habit, in the 80s & 90s, of changing agency agreements at a CEO whim. If an adviser asked if he could he get advice, the answer was sure – but you will take it, OR LEAVE. Those who delayed signing found that the moment they submitted new business, they were deemed to have accepted the revised agency terms.
Insurers were always about controlling distribution. STILL ARE FOLKS !
These advisers were part of the AMP family. They definitely were. It is just a special kind of family.
There has been no clear indication that AMP has an explicit right in their contracts to change the pricing for BOLR. If there was I bet Mr Ferrari would be shouting this from the mountain top. Further as it is ACCC which administers complaints about unfair contracts with small buisness, why did ASIC not refer the matter to ACCC. Asleep as usual!!
If this were any other profession that this was happening too it would be national news. Couple that with Advisers mental health and suicides it would be a national disgrace but for some reason Planners are seen as fair game. The fact that ASIC has done nothing also shows their disdain towards advisers.