AMP advisers to fight BOLR changes

The AMP Financial Planners Association will contest changes to AMP's Buyer of Last Resort terms flagged last week, saying the group has failed to meet contractual obligations to advisers.

Last week, AMP signaled it would look to align BOLR business valuations to realistic market values of around 2.5x. It also announced a renewed wealth strategy focused on quality, not quantity of advisers.

It's a strategy that is estimated to impact more than 50% of AMP and AMP-aligned advisers.

Responding, the ampfp has said the group is now moving to break trust with its own people.

Under contract, AMP must consult with financial advisers when considering changes to terms in addition to 13 months' notice of any move expected to have a detrimental impact, ampfpa chief executive Neil Macdonald said.

"AMP has done neither," he said.

"Advisers had to pay four times recurring revenue to buy into the right to service an AMP client book.  That was the price set by AMP. It was never a market value."

Macdonald said advisers would never have paid 4x when buying without AMP's promise to pay the same when the adviser retired.

Further, many of AMP's advisers have taken on significant debt - largely through AMP Bank - in order to buy or expand their books. Macdonald said that, in many cases, advisers put up their family homes as security in doing so.

Repaying these debts will likely prove extremely difficult for many advisers, Macdonald said, adding they could now face bankruptcy.

"We are concerned about the potentially devastating flow-on effect of the financial loss in terms of the mental health of advisers, their families, and their staff, as well as the impact on their clients," he said.

"What will happen to the clients of the advisers that AMP forces to move on, advisers who cannot, due to AMP-imposed restraints of trade, work in the financial services industry for at least three years?"

Commenting on the move, Synchron chair Michael Harrison described AMP's new strategy as a return to the dark ages.

"And it's a state of affairs that has been largely brought about by oppressive, anti-adviser government reforms," he said.

Further, issues identified by the Royal Commission - while the fault of the institutions themselves - have placed significant pressure on advisers.

"What many people have failed to understand is that AMP and the institutions were largely responsible for the fees-for-no-service debacle, not advisers," he said.

"For example, when AMP bought back books of clients from exiting advisers that it couldn't immediately on-sell to other AMP advisers, it went on raking in fees from those clients without organising any service.

"That is nobody's fault but AMP's and yet, somehow, most unfairly, the fees-for-no-service issue has still been perceived as poor adviser behaviour. In the simplest of terms, it is wrong to make AMP advisers suffer for AMP's sins."

Read more: AMP Financial Planners AssociationNeil MacdonaldAMP BankMichael HarrisonRoyal CommissionSynchron
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