In a statement on Wednesday, AMP confirmed that AMP Financial Planning (AMPFP) has filed a notice of appeal in relation to the judgment in the Federal Court of Australia that found the wealth giant was not authorised to make immediate changes to its buyer of last resort scheme.
Back in July, the Federal Court of Australia found in favour of advisers in the class action filed against AMP’s subsidiary, AMPFP, in 2020, in relation to the wealth giant’s controversial decision to change its Buyer of Last Resort (BOLR) scheme.
Justice Mark Moshinsky ruled in favour of the class action group, finding that the changes made by AMP with immediate effect were not authorised under the legislative, economic or product (LEP) provisions and “were ineffective”.
At the time, AMP said in a filing to the ASX, that it would provide an update in due course.
And on Wednesday, the wealth giant confirmed it has filed a notice of appeal. It also said it has agreed to engage in mediation that take place later this year.
Commenting on the latest development, AMP’s group executive, advice, Matt Lawler said: “While we believe we have grounds on which to appeal, we also recognise the ongoing impact the proceedings are having on practices, with whom we’ve worked hard to rebuild strong and trusted relationships.
“We value these relationships and that’s why we are fully committed to the upcoming mediation process in November 2023, with the aim of reaching an agreement on an outcome that allows us to put this behind us.”
AMP announced in July 2020 that a class action had been filed against its subsidiary AMP Financial Planning in the Federal Court of Australia.
The claim was brought by advisers who alleged the wealth giant failed to give them adequate notice before writing down their client book values under BOLR contracts.
Namely, the BOLR policy formed part of a contractual relationship between AMPFP and the financial planning practices in its network, which consisted of 542 practices by the time the changes were made.
The policy gave practices the opportunity to sell back their register rights to AMPFP on 12 months’ notice, which prior to the August 2019 changes, were valued at four times its ongoing revenue.
On 8 August 2019, AMPFP changed the multiple from four times to 2.5 times in respect of ongoing revenue.
Its grandfather revenue plan was also changed from four times to 1.42 times, with a further plan to continue reducing the figure per month until it reached zero by January 2021.
Back in 2020, a spokesperson for AMP told sister brand ifa that the group was confident changes made to the BOLR contracts had followed the letter of the law as well as being “in the long-term interests of our clients and advisers”.
“The financial advice industry has transformed dramatically in the past few years, including the removal of grandfathered commissions, new mandatory education standards and higher advice standards,” the spokesperson said.
“AMP has made difficult but necessary decisions to ensure we adapt to the new environment and continue to have a strong, viable advice business for clients,” the spokesperson added. “We recognise the changes are challenging for many in our adviser network, and we’re providing support to our advisers to help them manage the transition, including those who support the class action.”
