Labor Senator Deborah O'Neill

AMP Financial Planning sold defective client books, forced advisers to pay their own remediation costs and made them sign harsh restraint of trade and non-disparagement clauses according to records submitted to a parliamentary joint committee enquiry by the Australian Small Business and Family Enterprise Ombudsman.

In a series of responses to questions from Labor senator Deborah O’Neill taken on notice in early July, The ASBFEO outlined the nature of complaints it received from financial advisers and the tactics it says AMPFP employed.

Among those was the revelation that 14 AMP authorised representatives were sold books containing clients that didn’t exist. Those books were then marked down for those same non-existing clients when the advisers triggered buyer-of-last-resort agreements.

“14 AMP ARs have reported 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 ASBFEO’s record states.

“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 news comes a week after AMP’s new head of advice, Matt Lawler, vowed to unlock the “handcuffs” from AMP advisers by announcing the group was dumping BOLR agreements and releasing institutionally owned client books by the end of the year.

Senator O’Neill has previously called for a parliamentary enquiry into AMP’s treatment of financial advisers.

Point of sale pain

In further revelations, the ombudsman said advisers were paid the discounted BOLR rate of 2.5 X multiple even if sale agreements were made before then-CEO Francesco de Ferrari announced the group was cutting the offer back from the original 4 X multiple offer.

“14 AMP ARs reported that they applied for and were accepted for a BOLR exit prior to 8 August 2019,” the response stated.

“In these cases, AMPFP applied the reduced rate (i.e. 2.5 multiple) on the AMP AR’s exit from AMPFP, where that exit had been scheduled to, and did occur, after 8 August 2019.”

The ASBFEO was careful to note that it found no evidence to suggest AMPFP delayed buy-backs from advisers.

Restraint and disparagement

The ombudsman said it had received 25 complaints about what advisers say is the “expansive nature” of restraint of trade clauses, with one adviser reporting that their BOLR agreement with AMPFP was pulled because they were working within the financial planning industry.

These kind of restraint clauses are common, the ombudsman said, but not all groups hang them on advisers.

“In contrast to AMPFP, the restrain clause used by Securitor Financial Group Ltd did not restrict the existing [ARs] from working in the financial services industry in its entirety,” it noted.

Half a dozen AMP advisers were reportedly forced to pay remediation costs to clients out of their own pocket, the statements allege, even though they “followed AMPFP policies” in relation to their client interactions.

And according to its own admission in a response to the ombudsman, AMPFP has been active in restraining departing advisers from publicly speaking ill of the group.

“AMPFP informed my office that they consider non-disparagement clauses to be standard practice,” the ombudsman’s office stated.

One comment on “Ombudsman reveals AMPFP tactics against advisers”
  1. Avatar

    Sadly the mess created by the AMP with moving the goalposts in relation to BOLR etc has caused incredible hardship with many advisers who will likely never recover. It is amazing that the people that create the mess are no longer around to assist with the clean up ie Mr Ferraro.
    And the board and management of AMP just wipe their hands of this disgraceful mess.It should never have happened AMP should have stood by the agreements the advisers signed up with.Good to see some Politicians actually trying to help the advisers .

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