Labor senator Deborah O’Neill, who has called for a parliamentary inquiry into AMP’s treatment of its former advisers, asked the Australian Small Business and Family Enterprise Ombudsman a number of questions on notice around its dealings with the wealth giant as part of the mediation process it had facilitated on behalf of more than 100 terminated planners.
AMP has been criticised for its “weaponisation” of the exit audit process for advisers who were terminated as part of its 2019 wealth restructure, with the institution able to wipe the value of client books to zero if a high percentage of files had failed an audit, under the terms of its contracts with authorised representatives.
However, Senator O’Neill said she had received information from advisers that books sold to former AMP planners had been “incomplete” and contained “dead, missing or non-existent clients”.
Responding to the senator’s query about the books, ASBFEO said it had received information from 14 authorised representatives as part of their mediation process that “non-existent clients were included in the books purchased, from either AMPFP or another AMP AR, or that clients on the register were not contactable with no records of previous dealings with AMPFP, nor evidence that the clients were holding a current AMP product”.
“The main concern that AMP ARs raised was that the clients were considered by AMPFP to be valid at the point they were sold to the AMP ARs, but invalid at the point of calculating exit or BOLR valuations,” the ombudsman said.
Senator O’Neill also asked ASBFEO about any perceived differences in standards between the audits that were regularly conducted on AMP planners as part of their authorisation, and those they were subjected to as part of the exit process once terminated.
The ombudsman said 31 authorised representatives had indicated “an incongruence between the results of their BOLR audits and previous regularised audits”.
“These AMP ARs have expressed a view that the ‘exit audit’ process had the effect of reducing BOLR valuations where even minor failures were found. Affected AMP ARs claimed to have had excellent outcomes from previous audits,” ASBFEO said.
“AMP ARs reported that historical records were assessed against current requirements rather than contemporary requirements, or contemporary AMPFP policy. This office also received reports that exit audits appeared to be much more extensive than the ASIC look back program required.
“In nine instances, AMP ARs also reported incurring book value reductions through the BOLR audit process where the failures were attributable to clients acquired from AMP, and the failures pointed to existed in the files prior to the date of purchase from AMP.”
When asked if ASBFEO believed that “AMP as the licensor had a responsibility to make sure its licensees were compliant”, the ombudsman said that “it has been clear in our discussions with ARs who sought assistance from this office that they felt they were compliant with AMPFP policies and procedures as those policies and procedures existed at the time”.
The news comes following ASBFEO Bruce Billson’s appearance before a Senate committee in June, where Mr Billson said he had “communicated very clearly” to new AMP Australia chief Scott Hartley that settling disputes between the wealth giant and its former advisers should be “more of a priority”.
When an AMP adviser buys a book they have a period where they contact the clients and essentially audit the book and advise AMP. AMP then either adjusts the book or provides replacement clients. If the advisers didn’t do their “audit” they can’t really come back down the track and claim that they were “cheated”. The reality is almost every book purchased will have some discrepancies.But that applies to any book bought from any adviser and in every case I’ve seen appropriate adjustments are made. The Minister involved should really do a bit more research into how book sales work.
A lot of AMP advisers who bought books seem to have been suffering under the delusion that BOLR could be used as a “money back guarantee” if their purchase didn’t work out. This was never the case, even at the unsustainable 4x BOLR rate. Buying any sort of business requires a lot of careful due diligence. Not excessive optimism and unquestioning trust.
Amp lawyers trying to justify their position.
Sounds like you’ve never seen an AMP PSO or BoLR contract.
I have. I’ve also seen the AMP AR contract which was linked to those. I studied them all closely prior to walking away from a PSO offer. It was quite clear that it was overpriced, hugely risky, and significantly tilted in AMP’s favour. It was also quite clear BOLR was unsustainable, only applied in a narrow set of circumstances, and came with significant restrictions if exercised.
Unfortunately most who took up the PSO offer didn’t understand the business they were getting into, and either didn’t read, or didn’t understand, the contracts. They made a poor investment decision. Perhaps they weren’t suited to being investment advisers.
Its falling upon deaf ears!
How many hundreds of millions can AMP take from clients and advisers before they are held to account?
Even clients are now asking to get their money away from AMP….that’s the “acid test”!!
I can vouch for that happening as I am one of those practices as well, many years ago. But was told, it wasn’t their problem, despite having the facts. AMP is getting away with blue murder and we must bring this to light.
A corporate culture which the most callous white collar criminals would be envious of. The executives and the employees pulling the trigger sail off into the sunset while the planner and their family are deeply affected for their entire life. What a disgraceful company.
Currently there are a lot of long-term employee$ acro$$ AMP leaving with $ome very big redundancy payment$ (like 104 week$ (taxed very low) plu$ accrued leave). This include$ many who work in AMP and advi$er $upport area$. Many are retiring with big grin$$$ on their face$. $ome have a few year$ till they can retire. None are unhappy about leaving. Good on em.
The shareholders are paying for every leech being removed.
Hopefully they will not work (be employed is correct terminology as they never “worked” at all) in the Industry again.
AMP $1.06 today and on the way down.
I think that’$ a little har$h. Many of the$e lucky AMP folk being made redundant are al$o $hareholder$ having been given $hare$ that are now at be$t tax credit$. Al$o AMP $hareholder$ are very u$e to their money being wa$ted, $o what’$ the big deal. AMP $taff have been through a tough time $ince the brilliant TV of the royal commi$$ion: a decrea$e or cancellation of payri$es and bonu$es; no xma$ party la$t year; not being able to head into the cbd and have long lunche$ at the many great bar$ and re$uarant$ on a Friday. It’$ been tough for them. $ome will find new job$ in the $ector, $ome won’t need to. It’$ a $ad time for tho$e remaining at AMP.