A class action has been filed in the Federal Court against AMP Financial Planning (AMPFP) after it terminated the business of hundreds of advisers and almost halved acquisition terms.

Last year, AMPFP lowered the amount it would pay for adviser businesses, without notice, from 4 times recurring revenue to a maximum of 2.5 times.

ALP Senator Deborah O’Neill has called for a review into the matter and says the Australian Securities and Investments Commission (ASIC) should do more, saying planners have been left with “huge debts to AMP” alongside restraint of trade conditions stopping them from earning an income.

“The treatment of the AMP financial advisers is so egregious that this is a disincentive for people to get into the industry,” Ms O’Neill told a Parliamentary Joint Committee on Corporations and Financial Services earlier this month.

Many advisers bought businesses from AMPFP at the higher payment rate on “the promise” the businesses would be acquired back on the same multiple when they left, The Advisers Association (TAA) CEO Neil Macdonald said, describing it as “a key plank in AMPFP’s ecosystem.”

“These are businesses that were valued by AMPFP for lending purposes at 4 times recurring revenue and in most cases were funded by AMP Bank loans or via another tripartite banking arrangement, again at 4 times recurring revenue,” Mr Macdonald said.

The Australian Small Business and Family Enterprise Ombudsman received more than 100 complaints from AMP financial planners related to the changes and has referred more than 60 Buyer of Last Resort (BOLR) terms-related cases for mediation, according to TAA.

“Treatment of AMP financial planners not a priority for ASIC. This is why I've called for an inquiry,” Ms O’Neill said.

AMP terminated the businesses of 250 planners and “slashed” the amount it would pay for their businesses, she says, citing a case of one AMP financial planner’s business being devalued by over a third, or millions of dollars, under the BOLR changes.

There were clear “contract issues” as the master terms agreement required AMP to give 13 months notice of any changes to its valuation methodology, she says.

“That is not of sufficient concern for you to investigate Mr Shipton?”, Ms O’Neill asked the Parliamentary Committee.

ASIC Chairman James Shipton responded during the July 15 proceedings that if “further and better particulars come to hand on this matter then we would be very prepared to review that and to amend our conclusion”.

The latest class action, just filed by Corrs Chambers Westgarth in the Federal Court, follows a series of lawsuits filed against AMP since the Hayne royal commission by Shine Lawyers, Quinn Emanuel Urquhart & Sullivan, Phi Finney McDonald and Slater and Gordon.

TAA’s Mr Macdonald said it was imperative the issue be resolved to ensure advisers can continue to provide Australians with affordable access to financial advice.

Many advisers have resorted to using their homes as security and felt they had “little choice but to join the class action,” says TAA, which was created with a name change after AMP Financial Planners Association merged with Hillross Advisers Association.

“We would have preferred, and we continue to prefer, that AMPFP work with the association to negotiate fair and reasonable outcomes for all members,” Mr Macdonald said.

AMP Financial Planning said in a statement it was “confident in the actions it took in 2019 and will defend the proceeding accordingly”.