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Calls to investigate treatment of AMP advisers

ASIC has come under pressure from a Senator to look into AMP's treatment of financial advisers, including reducing the value of its Buyer of Last Resort (BOLR) agreements.

Labor senator for NSW Deborah O'Neill has written to ASIC chair James Shipton, urging him to investigate the AMP BOLR changes.

Last year AMP made changes to its BOLR agreements, which guarantee the value of AMP Financial Planning client books, reducing them from four times annual revenue to two and a half times annual revenue.

"This decision has drastically devalued the businesses of many financial advisers," O'Neill said in the letter.

"This was also applied retroactively to many planners who had purchased client books in good faith with this guarantee."

O'Neill also took issue with the fact that AMP cut grandfathered commissions in January 2020, 12 months ahead of the legislated ban on grandfathered commissions.

"Furthermore, AMPFP has issued notices of termination to an estimated 250 planners that were assessed as being of 'lower profitability' , forcing many to sell their businesses for less than one tenth of what they were worth before these changes," she said.

The Senator added that the Australian Small Business and Family Enterprise Ombudsman has received over a hundred complaints from the financial advisers affiliated with AMP over these issues.

O'Neill asked Shipton to commence an ASIC investigation into AMP's actions.

"I ask that you immediately commence an investigation into this matter, as I understand theAMP banking arm has funded the operation, and to prepare a full report for the Joint Committee on Corporations and Financial Services oversight hearing on July 13," she said.

A spokesperson for AMP said that the decision to reset commercial terms was necessary given changes and disruption across the industry.

"Throughout the process AMP has consulted closely with affected advisers, the industry associations and the Small Business Ombudsman, including participating in several mediation sessions with advisers," the spokesperson said.

"We are providing support to advisers to help them manage the BOLR changes and make an informed decision for their future."

On the issue of grandfathered commissions, the spokesperson said AMP had been consistent in its stance that they would be turned off this year.

"We also recognise the impact of the changes for advisers and the challenging environment that everyone is facing," the AMP spokesperson said.

"The commissions will be returned to their clients and we'll continue to provide advisers with as much support as possible, including actively working with them to help them prepare their businesses and supporting them as they transition to fee for service models."

Read more: BOLRASICBuyer of Last ResortDeborah O'NeillJames ShiptonAMP Financial Planning
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