AMP has lost in a class action filed by its authorised financial advisers, who disputed changes made in a buyout policy that would result in them getting less money from selling their practices to the financial services provider. 

Judge Mark Moshinsky ruled the changes made to the Buyer of Last Resort (BOLR) exit scheme  on August 8 2019 by AMP were “ineffective” and “not authorised” under the scheme’s “legislation, economic or product (LEP)” provision. 

The BOLR policy formed part of the contractual relationship between AMP Financial Planning and each financial planning practice in its network. 

It gave practices that wanted to leave the network the ability to sell back their register rights to AMP Financial Planning on 12 months’ notice or less in some cases.  

The purported changes in August 2019 meant the buyout was calculated on the basis of 2.5 times the value of ongoing revenue received by the practice in the prior 12-month period, instead of four times. 

Lead applicant Equity Financial Planners contends that the changes were not authorised by the LEP provision and that AMP Financial Planning “acted in breach of contract in putting forward BOLR valuations based on those changes”. 

Judge Moshinsky says in his ruling that Equity Financial Planners has suffered loss and damage as a result of AMP Financial Planning’s “breach of contract” and is entitled to damages in the sum of $813,560, subject to final adjustments. 

Wealthstone, a sample group member in the class action, is entitled to about $115,533 in damages, subject also to final adjustments. 

The final settlement is yet to be determined as it is not clear how many practices have the BOLR in their contracts. 

As at August 2019, there were about 542 practices in the AMP Financial Planning network, according to the ruling. 

AMP has not indicated if it intends to appeal. 

“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,” it said. 

“Subject to any appeal, a process will be required to determine the impact of the decision on other group members. AMP will provide an update in due course.” 

Click here for the court ruling.