AMPs decision to re-evaluate what it pays for its aligned advisers’ businesses from 4x to 2.5x under its new Buyer of Last Resort terms continues to play out, with AMP executives making their case in the media recently. It looks increasingly likely that at least some affected advisers intend to tert AMP’s decision in court.
AMP group executive of advice Alex Wade has told IFA that AMP will be dealing with advisers concerns on a case by case basis. A particular concern expressed by adviser advocates is that many advisers subject to the BOLR valuation reduction from 4x to 2.5x have taken out loans from AMP Bank under the expectation that their businesses would be valued at four times. Given that AMP devalued the book – not the adviser, Wade was asked whether AMP should “meet these advisers in the middle” and adjust the loan balances accordingly?
Wade said the group is having individual discussions with each practice about this issue. “There is no one-size-fits-all approach,” he said. “It differs by practices, which is why it is a pretty big task.”
In the article Wade said he “empathised” with effected advisers, saying “You had an expectation of something that has changed. The challenge with that is that it is unfortunate that the industry has changed. It is a reality of the circumstance, but I can empathise that some people didn’t think it would happen so fast or would happen differently.”
The AMP Financial Planners Association (AMPFPA) said its members intend to hold AMP accountable for the severe financial, reputational and psychological harm it is inflicting on its own advisers. A survey of its member practices regarding potential action they want to take received a response rate of over 90 per cent. Of those who responded, over 93 per cent indicated they support legal action.
Regarding AMP’ BOLR devaluation, AMPFPA CEO, Neil Macdonald said “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.”
He said that based on assurances, from as late as May 2018, that prevailing BOLR terms would remain the same, many practices made a decision to stay on with AMP last year, rather than exercising their BOLR rights”.