AMP is in active discussions with aligned advisers about a major restructure of the troubled licensee network, akin to the overhaul planned by rival Insignia Financial.

The wealth giant on Thursday unveiled underlying net profit after tax of $112 million for the first half of FY23 to the ASX, buoyed by strong results in its banking and platform businesses.

But the troubled financial advice business reported a loss of $25 million, albeit an improvement on the $30 million loss in the first half FY22. The loss casts a cloud over AMP’s stated objective of breaking even in the advice business in FY24.

AMP rival Insignia Financial last month announced a major restructure of its licensee business in order to meet its own break-even target this financial year, including the sale of dealer groups Millennium3 and Godfrey Pembroke, and plan to release equity in three remaining licensees to authorised representatives over time.

Asked whether AMP may have to resort to similar measures, CEO Alexis George tells Professional Planner all options are on the table.

“We’ve been working with our advisers to explore many options over the last month – and some of them are quite radical,” George says. “But I think it’s important we listen to the advisers, because they’re very important part of our business.”

However, George says AMP can’t begin to “spin off” or restructure any of its licensees until the broader advice business is in better financial health. While she still hopes to reach the goal of breaking even this financial year, she says she will resist raising licence fees or under-resourcing the business to avoid breaking any agreements with advisers.

Instead, she will prioritise technology upgrades and revamps to attempt to remove the costs inhibiting profits in financial advice, though she admits “the last few million are going to be really hard”.

Best guess on BOLR

The comments come as AMP sets aside a provision of $50 million as an estimate for damages it may be compelled to pay to former advisers who sued the company over its decision, under previous CEO Francesco De Ferrari, to reneg on decades-old contracts to act as Buyer of Last Resort on generous terms when they retire.

Plaintiff lawyers acting for aggrieved advisers in the class action suit are understood to have made orders to the court in recent weeks, with AMP’s lawyers following suit this week.

A Federal Court judge will now decide whether to decide the quantum of damages or request another hearing.

One class member and former AMP adviser tells Professional Planner the $50 million figure provisioned for was “absurdly small”.

Asked to respond, George says: “From our reading of the judgment and all the expertise we have, that’s our best estimate.”