AMP Bank advisers’ loans in the mediator’s sights
Australian Small Business and Family Business Ombudsperson Kate Carnell said a major concern in the ongoing mediation process between AMP and the dismissed advisers was “that AMP Bank is not behaving unreasonably” .
“We will keep a close eye on this – AMP Bank could call for loans depending on the fact that the BOLR has been reduced, so the amount of money going out to the other side, the loans will no longer have the security of the BOLR, ”says Mrs. Carnell.
“As we strongly believe that AMP caused this problem, we think it is important that AMP Bank, as it deals with outstanding loans, is reasonable. “
Only 18 of the 60 cases referred to mediation by ASBFEO have been resolved to date, 15 still pending, five having failed to reach a satisfactory outcome and 25 having been withdrawn.
Neil Macdonald, of the Association of Counselors, said the AMP assesses the personal financial situation of dismissed counselors as part of the mediation process.
“AMP said they didn’t want to send people out of business – it’s probably still early days, but what they seem to be asking are asset and liability statements for people so they can make a decision on what to do, ”Macdonald said.
“Some mediation cases will lead to a settlement on this, but we don’t know what it is. What I think the AMP is more likely to do is take out a mortgage on [the adviser’s] house and get it back when they sell.
He explained that due to the depreciation of the book values of clients, which had not resulted in an adjustment of the initial loan taken out by some advisers through AMP Bank, the advisers concerned could withdraw due to AMP money, without any guarantee. to repay their loan.
“The” exercise start-up offer “was that you borrowed $ 250,000 guaranteed by the registry that AMP gave you, but what happened was that after some people paid back the $ 250,000, after six, seven, eight years at AMP, they have nothing to show for it, and others will have outstanding debt, ”said Mr. Macdonald.
“The complaints are about why should I get away with debt because of the AMP decision, and why should I leave with nothing.”
The mediation concerns AMP’s decision to reduce the guaranteed value of its BOLR contracts from four times to 2.5 times recurring revenues and to terminate 250 planners who were no longer profitable as a result of the write-downs.
According to a 2018 AMP Bank annual report, AMP Group Holdings had assumed compensation from February 2019 for losses suffered by the bank “in connection with loans granted to an AMP advisor relating to a change in law, regulation or a change in license holder AMP makes arrangements with advisers, or issues identified during the Royal Commission on Misconduct in Banking, Pensions and Financial Services ”.
Uncertain outlook for indebted advisers
A concerned advisor speaking to ifa on condition of anonymity said in his experience that AMP had been reluctant to take responsibility for the preferential loans granted to AMP’s financial planning advisers through AMP bank.
“The practice start-up offers that we had initially were a joint product of AMP and AMP Bank – you couldn’t go anywhere else and get what was on offer, ”the advisor said.
“But now that the bills are due, they say we have nothing to do with AMP Bank, you did, so it’s your problem with the bank.”
Having failed to come to a suitable settlement with the asset manager and still having a significant debt to AMP bank, the advisor said he feared the bank would soon come “knocking” to demand payment. which could mean “put my house up for sale and throw my family on the street”.
The adviser said he also filed a complaint with the AFCA regarding the terms of his loan, which Mr Macdonald said had been the case with a number of the dismissed advisers who had outstanding loans. AMP Bank.
“I think most of them are still going through the process [with AFCA], I don’t know about it at this time, ”Macdonald said.
An AFCA spokesperson confirmed that the ombudsman had received “a small number” of complaints about appropriate loans by AMP Bank from consulting firms. Due to confidentiality, the spokesperson was unable to comment on the progress of the complaints.
A spokesperson for AMP added that AMP Bank “is working closely with advisers affected by the changes.”
“Our priority is to support advisors and respond to their unique needs and circumstances in order to achieve fair and reasonable results,” said the spokesperson.
“We recognize that these are difficult times for financial advisors due to the significant economic changes and disruption that have occurred in the industry. This includes the elimination of grandfather commissions, new mandatory training standards and higher standards of counseling.
“AMP continues to work with the Advisors, the Association of Advisors and the Small Business and Family Business Mediator, including fully participating in mediation with the Advisors to support them in the change. “
The ifa Excellence Awards are back in 2021 and nominations are now open! This prestigious distinction recognizes outstanding professionals in the financial advisory industry, highlighting the outstanding achievements of the nation’s best and brightest. If this sounds like you or someone you know, then nominate today for the ifa Excellence Awards 2021!