AMP has coughed up A$100 million to settle a long-running legal dispute with hundreds of Australian financial advisers stung by unilateral changes to business buy-out terms in 2019.
The settlement “with no admission of liability” draws a line under the buyer-of-last-resort (BOLR) issue that had dogged the ASX-listed entity since the Australian Royal Commission into financial services in 2018.
In 2019 AMP tore up existing BOLR agreements, almost halving the revenue multiples used to calculate valuations of adviser practices tied to the firm’s dealer group.
This April a representative sample of two advice firms won damages in a court ruling that found AMP had erred in amending the buyout terms.
AMP lodged an appeal in October but opted for the final A$100 million cash settlement following a mediation process. The group provisioned A$50 million for costs relating to the BOLR case in its June accounts.
Alexis George, AMP chief, said in a release that the agreement was “an important step forward for our advice business and for AMP more broadly, as it allows us to put this legacy matter behind us, which has impacted relationships with our valued advisers”.
“We’ve worked very hard in recent years on rebuilding the relationships with advisers…,” George said.
The AMP share price nudged up a little to A$0.91 cents at the close last week, following a sharp 15 per cent drop the previous week as investors responded to new digital bank plans released by the business.