AMP could face inquiry over its treatment of financial planners after Labor, Liberal MPs give backing – ABC News

Embattled wealth manager AMP is likely to face another inquiry over its behaviour, this time into its treatment of its financial planners.

• The enquiry into AMP’s actions has the support of both the major parties
• The ABC understands a class action against AMP will be filed imminently
• AMP says it has the right to change the terms of its contracts with planners

Labor senator Deborah O’Neill has written to the chair of the Parliamentary Committee on Financial Services, senator James Paterson, calling for an “immediate inquiry” into AMP’s behaviour.
The inquiry is likely to go ahead after former financial planner and federal Liberal National MP Bert van Mannen put his support behind it.
“What AMP has done to its advisers is disgraceful, it has chucked them under the bus,” he told the ABC.
AMP has spent the last year forcing hundreds of its own financial planners out of business and out of work, with many losing their homes and being left with huge debts to the company.
In August last year, AMP unveiled its plan to slash the number of advisers, as it aggressively tried to restructure the business.
The company wrote to an estimated 205 of its aligned financial planners, telling them their partnership with AMP would be terminated by the end of October 2019.
The exit conditions imposed by AMP include a non-compete clause, making it impossible for planners to continue to work in financial services.
This forced them to find a new career or exit the workforce.
Senator Deborah O’Neill has called a new inquiry into AMP.(ABC News: Matt Roberts)
The planners targeted by AMP had businesses that were not making enough money or selling enough products to clients.
AMP had long-standing contracts with planners that stated it would buy back their businesses at four times their annual earnings.
It is called the Buyer of Last Resort or BOLR agreement.
AMP slashed that to only two and a half times the earnings of businesses.
It then reduced it further by retrospectively applying changes to grandfathered commission payments.
The changes greatly reduced the amount of money AMP had to spend on compensation.
Senator O’Neill believes AMP’s actions are unconscionable.
“This decision has drastically devalued the businesses of many financial advisors,” she wrote in her letter.
“This was also applied retroactively to many planners who had purchased client books in good faith with this guarantee.
“They have also applied legislative changes to grandfathered commission payments in January 2020, 12 months ahead of the legislated commencement date, further devaluing these businesses.”
The ABC has spoken to planners who say they have had mental and family breakdowns, lost their homes and been left with huge debts to AMP as a result of the company’s actions.
“What AMP has done to financial planners, in terms of their Buyer of Last Resort agreements, is reprehensible and I don’t think they have treated their advisers fairly and equitably,” Mr van Mannen said.
“AMP should honour the terms of their original agreements.”
For almost a year, the Small Business Ombudsman Kate Carnell has been pushing AMP to deal fairly with the planners it is pushing out of the business.
Ms Carnell’s inquiries began after a series of stories ran on the ABC’s The Business program.
Since then, it has referred 63 planners to mediation.
Only 18 of these cases have been settled.
“The low settlement rate shows that further action is needed to help resolves these disputes in a fair way,” Ms Carnell said.
Small Business Ombudsman Kate Carnell has spent nearly 12 months trying to get better deals for planners.(ABC News: Tom Maddocks)
The ABC spoke to one of the planners who has settled.
They told the ABC they felt “completely ripped off” after the mediation.
“I knew I was accepting a bad deal, I knew that it would essentially bankrupt me, but I just couldn’t take it anymore

Click here to view the original article.