Ombudsman calls on AMP to come to mediation table with planners
AMP’s retreat from the advice market has sparked confusion and fear among financial planners who borrowed from the wealth manager to buy into the business, with the small business ombudsman urging AMP to come to the mediation table.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has urged AMP to formally commit to mediation, as it moves to exit up to 250 financial planning businesses.
Last year, AMP informed planners it was reducing its presence in the space, giving them several options to leave. One option was to sell their business back to AMP, but at half the price and with restrains on trade, meaning that once they sold, they couldn’t work in advice for three years.
Ms Carnell revealed that more than 80 AMP financial planners have approached her office in the past few months, with many fearing financial ruin as a result of AMP’s new exit terms.
“Many of those planners who borrowed from AMP to buy into the business at a set price, now face losing their homes and their livelihoods, as the financial institution seeks to impose a three-year restriction on working as a financial planner,” Ms Carnell said.
“My office has met with AMP and although they signalled they were open to mediation, they have yet to confirm their participation.
“It’s critical these small business owners have clear information about their financial position before making any big decisions about their future. Mediation would be one way of providing that much-needed clarity.”
Her office has called on AMP to waive debts for those financial planners facing AMP-imposed reduced buyback values.
“AMP has also been asked to extend its termination deadline so that a resolution may be reached.”
Small businesses in the financial planning industry have faced a great deal of turmoil in the aftermath of the banking royal commission, Ms Carnell explained, with hundreds of planners bearing the brunt of “brutal restructures and fire sales by banks and wealth funds”.
“We remain concerned about a number of behaviours that may include the conduct of lookback audits, financial planning licensors shifting responsibility for client compensation payments to licencees, short notice periods provided to licencees exiting the business and restraint of trade provisions.”
Any small or family business that has been impacted by changes in the financial planning sector is encouraged to share their story via [email protected].