Labor senator Deborah O’Neill, who has called for a parliamentary inquiry into AMP’s treatment of its former advisers, asked the Australian Small Business and Family Enterprise Ombudsman a number of questions on notice around its dealings with the wealth giant as part of the mediation process it had facilitated on behalf of more than 100 terminated planners.
AMP has been criticised for its “weaponisation” of the exit audit process for advisers who were terminated as part of its 2019 wealth restructure, with the institution able to wipe the value of client books to zero if a high percentage of files had failed an audit, under the terms of its contracts with authorised representatives.
However, Senator O’Neill said she had received information from advisers that books sold to former AMP planners had been “incomplete” and contained “dead, missing or non-existent clients”.
Responding to the senator’s query about the books, ASBFEO said it had received information from 14 authorised representatives as part of their mediation process that “non-existent clients were included in the books purchased, from either AMPFP or another AMP AR, or that clients on the register were not contactable with no records of previous dealings with AMPFP, nor evidence that the clients were holding a current AMP product”.
“The main concern that AMP ARs raised was that the clients were considered by AMPFP to be valid at the point they were sold to the AMP ARs, but invalid at the point of calculating exit or BOLR valuations,” the ombudsman said.
Senator O’Neill also asked ASBFEO about any perceived differences in standards between the audits that were regularly conducted on AMP planners as part of their authorisation, and those they were subjected to as part of the exit process once terminated.
The ombudsman said 31 authorised representatives had indicated “an incongruence between the results of their BOLR audits and previous regularised audits”.
“These AMP ARs have expressed a view that the ‘exit audit’ process had the effect of reducing BOLR valuations where even minor failures were found. Affected AMP ARs claimed to have had excellent outcomes from previous audits,” ASBFEO said.
“AMP ARs reported that historical records were assessed against current requirements rather than contemporary requirements, or contemporary AMPFP policy. This office also received reports that exit audits appeared to be much more extensive than the ASIC look back program required.
“In nine instances, AMP ARs also reported incurring book value reductions through the BOLR audit process where the failures were attributable to clients acquired from AMP, and the failures pointed to existed in the files prior to the date of purchase from AMP.”
When asked if ASBFEO believed that “AMP as the licensor had a responsibility to make sure its licensees were compliant”, the ombudsman said that “it has been clear in our discussions with ARs who sought assistance from this office that they felt they were compliant with AMPFP policies and procedures as those policies and procedures existed at the time”.
The news comes following ASBFEO Bruce Billson’s appearance before a Senate committee in June, where Mr Billson said he had “communicated very clearly” to new AMP Australia chief Scott Hartley that settling disputes between the wealth giant and its former advisers should be “more of a priority”.
