AMP extends adviser deadline

Under-pressure AMP has extended a deadline for financial advisers it placed on notice to merge or leave the group.

Under-pressure AMP has extended a deadline for financial advisers it placed on notice to merge or leave the group, as the small business ombudsman engages with the wealth company over complaints.

The AMP Financial Planners Association (Ampfpa) made a formal request to the company early this month for an extension to an October 31 deadline by AMP, which the company confirmed on Sunday had now been pushed back to November 29.

It comes as hundreds of financial adviser practices decide whether to stay under a new structure, merge with others or leave under AMP’s advice network overhaul.

AMP chief executive Francesco De Ferrari unveiled a new strategy in August which sees practices that don’t meet revenue and other targets potentially culled from the group.

The strategy includes slashing the rate AMP will pay for planning practices as the “buyer of last resort”, from four times recurring revenue to 2.5 times. It also imposed terminations, size thresholds and productivity measures.

The changes have caused angst among parts of the AMP network, particularly those that took out large loans from the company’s banking division to buy their practice.

For those preparing to leave, the loans provided must be repaid in full so that they can take their client books without being shackled by longer non-compete periods.

AMP Bank isn’t able to finance practices outside of its own network, a rule that is being reviewed.

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell, whose office has met with and written to AMP representatives, said she was “very pleased” with the deadline extension.

But Ms Carnell said the ombudsman was working through a number of cases and complaints against AMP where advisers were treated “very poorly”.

“We are looking for a fair outcome for those advisers,” she added.

An AMP spokeswoman confirmed the adviser deadline had been extended and said the group was committed to helping those impacted “choose the right path”.

“In our ongoing engagement with advisers, we’ve listened to their feedback that some require additional information before they can properly consider their options. We’ve therefore decided to push back the decision date,” she said. “We had already extended the deadline for practices who previously told us they needed more time.

“We are continuing to support them with a range of initiatives … The pathways available to them include transitioning out of the network, restructuring or retention in certain circumstances.”

The Finance Sector Union is also taking an active interest in the AMP restructure.

AMP is said to have told targeted advisers it would give consideration to those seeking “genuine retirement” and also to those whose practice loans were valued at more than their assets. Grandfathered commissions being received by advisers are also being taken into account as part of an exit calculation.

Ampfpa boss Neil Macdonald argued that AMP advisers who were on notice were still awaiting key information ahead of making a decision.

“They need the detail, which can be quite a big amount of money, so they can make a decision,” he said.

Ampfpa has tapped Corrs Chambers Westgarth to pursue legal action against AMP.

AMP has said a legal dispute was not the company’s preferred approach and it would “vigorously defend” any court action.