AMP will settle the Buyer of Last Resort class action for $100 million, closing a chapter for some, but leaving others underwhelmed.
The settlement ends the BOLR class action proceedings, preventing the legal action from dragging on for several more years and AMP is not required to make any admission of liability.
After the court ruled in favour of the class action plaintiffs led by Corrs Chambers Westgarth in July, AMP announced in September it would appeal the decision with the aim of reaching a settlement if possible.
Professional Planner understands mediation was held over two sessions in November, with the second session on 22 November and the announcement of a settlement made before the market opened on Thursday morning.
AMP group executive for advice Matt Lawler tells Professional Planner the settlement was an important step to deal with the past and address the legacy matters.
“This mediation gave us a chance to deal with the class action in its entirety rather than waiting for another few years for more cases to be heard. It gave us an opportunity to bring it all together and wrap it up in one go,” Lawler says.
“We’re pleased we got a result. No one wants this going on forever into the future so it’s pleasing we got to an outcome.”
David Haseldine, a former AMP adviser and class action plaintiff, says the reaction with those in the class action camp has been mixed and hinted at potential future legal action.
“Some of the people are happy to see it finalised,” Haseldine says. “Some of us [are more] jaded than that.”
Haseldine adds he believes the $100 million will not sufficiently cover what many involved in the class action estimate they are owed.
“At this point in time what they’ve done is open the door for planners like to me use the July 2023 ruling against them in individual action against AMP to make up the difference,” he says.
Neil Macdonald, CEO of the The Adviser Association which represents AMP licensees, says most of the members will be pleased a decision has been made.
“Our understanding is that Corrs will need to work through what that means for individual firms in the class action,” Macdonald said.
“From our perspective, it’s good a decision has been made and we will acknowledge the current leadership and management was prepared to go to mediation to try and get a resolution.”
AMP changed the BOLR agreement under the leadership of former group CEO Francesco De Ferrari and domestic CEO Alex Wade during the Hayne royal commission, fearing a “BOLR run”.
The agreement would change from AMP buying practices, as a supposed last resort, from four times recurring revenue to 2.5 times, with further reductions for grandfathered commissions, which led to the class action being filed in July 2020.
AMP made a provision of $50 million in 1H23 financial statements based on the judgement on 5 July 2023 and the settlement announced on Thursday covers the class action in its entirety.
Lawler said the company had worked hard with those practices over the last couple of years.
“We’ve rebuilt trust in terms of the way we’re dealing with them and supporting them, but this was a threshold issue that had to be dealt with and we’re really pleased that we’ve gone another step towards putting it behind us,” Lawler says.
In a statement to the ASX, AMP chief executive Alexis George said the settlement allows AMP to put a legacy matter behind it which has “impacted relationships with our valued advisers”.
“We’ve worked very hard in recent years on rebuilding the relationship with advisers and we’re looking forward to working with them in the delivery of quality financial advice, at a time when Australians need it more than ever,” George said.
