On 8 August 2019 AMP announced sweeping changes to the Buyer of Last Resort (BOLR) scheme. Under BOLR, AMP Advisers have the option of selling their financial advice practice back to AMP at a pre-determined multiple.  For years, that multiple was 4X. On 8 August 2019, AMP announced it had reduced the multiple from 4X to 2.5X.

Media have reported that:

• the 2.5X multiple applies only to ongoing fee arrangements, and the multiple applied to ‘grandfathered fees’ is close to zero.

• some AMP Advisers have been given ‘termination letters’ – an ultimatum to accept one of four options (effectively accepting the revised BOLR) or AMP would take back their clients leaving them no business.

In many cases AMP Bank lent to money to advisers to purchase practices or clients, based on a 4X multiple valuation.  At 2.5X many of those loans now exceed the practice value based on AMP’s new multiple.

If AMP’s position goes unchallenged, some AMP Advisers will lose everything, and AMP Advisers will be some of the biggest losers of AMP’s post-Hayne reckoning.

Advisers should not let AMP’s position go unchallenged.  Contrary to appearances, the BOLR changes are anything but cut and dried.

There are complex legal issues which may affect the operation of the BOLR, Adviser’s legal relationship with AMP, what AMP can and can’t do and the options available to Advisers.

Advisers need expert advice.  We are experts.  If you, or anyone you know, is or may be adversely affected by AMP’s actions, contact us.

This information is not legal advice, and does not take into account your personal circumstances.  It is general information only.  Get expert advice.