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Verdict made against AMP in buyer of last resort class action
The Federal Court has found in favour of financial planners under AMP’s umbrella who objected to the wealth giant’s controversial decision to change its buyer of last resort (BOLR) scheme.
Naomi Neilson
Justice Mark Moshinsky ruled in favour of the class action group on Wednesday morning (5 July), finding that the changes made by AMP with immediate effect were not authorised under the legislative, economic or product (LEP) provisions and “were ineffective”.
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Lead applicant Equity Financial Planners is entitled to damages in the sum of $813,560, while sample group member Wealthstone is entitled to damages in the sum of $115,533.51. There will be a further process to determine the impact on other group members.
In an ASX release, AMP said it is reviewing its options.
“Noting the complexity of the matter, AMP is reviewing the judgment in detail to determine the full effect of the judgment and its next steps. AMP will provide an update in due course,” AMP said.
With assistance from Corrs Chambers Westgarth, Equity brought the proceedings on behalf of the network of financial planners established under the AMP Financial Planning (AMPFP) group.
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.
The changes also affected the practices that had submitted a BOLR application prior to the August 2019 date, meaning those practices had to do so under the new figures and could not withdraw their application unless AMPFP consented.
Justice Moshinsky said it was not necessary to determine if AMP breached its contractual obligations of good faith.
