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.”

AMP declared an interim dividend of 2.5 cents, while the share price jumped 4.27 per cent to $1.15.

However, any further capital return will be placed on hold as the company awaits confirmation of its exact commitment to BOLR remediation.

‘Ambition to grow again’

AMP told the market on Thursday it would not pursue any “material” mergers and acquisitions in order to preserve capital it has promised to return to shareholders.

But George says the company is still open to relatively small-scale M&A to grow its advice footprint, which has diminished from more than 3500 before the Hayne royal commission to fewer than 1000 advisers today.

The comments come as a number of licensees are understood to be running a ruler over Insignia’s Millenium3, a storied dealer group picked up by the then-IOOF in its acquisition of ANZ’s financial advice business in 2018.

George says she “hasn’t looked at the M3 book in a number of years” and preferred organic growth of adviser numbers to ensure cultural fit, but reiterates AMP is ambitious to “grow again”.

“Where we stand now, we are in a position to expand the adviser numbers,” she says. “We probably weren’t in that position a year ago, but absolutely we’re in that position.”

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