Deborah O’Neill, an Australian senator from the Labor party, has asked the Australian Securities and Investments Commission to look into AMP for changing the contracts of departed financial planners, which left many of them owing money to the company.
When AMP changed the terms and conditions of long-term agreements with its financial planners in August last year, it was a big deal! Businesses that give people advice lost more than one-third of their value because of the change.
Before, the buyer of last resort (BOLR), AMP, would purchase the client books of resigning financial advisers for four times their yearly revenue. Now, AMP is the buyer of last resort. This was cut in half to save money.
Senator O’Neill sent a letter to the head of ASIC, James Shipton, on Wednesday night. Shipton is the head of ASIC. As the head of ASIC, Shipton is in charge of everything. The letter asked ASIC to look into how AMP’s policy change might affect planners.
There was a letter in the mail that said many financial advisors’ businesses have lost money because of this decision. Many planners who bought books for their clients in good faith with the promise that they would get them back got this back, too.
As of August, Senator O’Neill says that about 250 financial planners have been fired, which is about the same number. This is because AMP said that it was going to focus its financial advice on the parts of its business that made the most money.
Financial advisors were pushed to sell enterprises for a fraction of their worth, according to Sen. O’Neill.
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AMP financial advisers have lodged over 100 complaints with the Australian Small Business and Family Enterprise Ombudsman.
Following the Hayne royal commission, AMP said it was hard but necessary to change the terms of the contracts. The spokesperson said this involves abolishing outdated commissions, raising education standards, and regulating advice.
Assistant national secretary Nathan Rees said the AMP policy change affected over 1,000 financial planners. Some people had to file for bankruptcy and others lost their homes because of the change.
Mr. Rees said that it’s important. People liked it, but not at the price they thought they agreed on. They’ve had the rug pulled out from under them. Mr. Rees said the FSU had written to AMP’s owners, but nothing came back. People should treat their own people this way, he says (aligned advisers). AMP should go back and do what it agreed to do in good faith.
An AMP spokesman said that the company had 30 meetings with financial advisers to talk about the changes.
Planning professionals have lost money due to the issue, thus Corrs Chambers Westgarth is investigating a class action lawsuit. If AMP Financial Planners Association President Neil Macdonald is correct, this might take years to resolve.
In his speech, Mr. Macdonald said the problem is that these people are small business owners. In two or three years, they won’t be able to work and won’t be able to pay back their loans.
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