The newly slimmed-down AMP has lodged an appeal against a July Australian Federal Court decision that left the ASX-listed entity facing potential damages of more than A$100 million over a unilateral change to adviser contracts three years ago.
In a statement last week, the financial services group confirmed it would contest the ruling by Justice Moshinsky that found AMP erred in altering the buyer-of-last-resort (BOLR) terms for two advice businesses operating under its brand.
Moshinky awarded the two Australian advisory firms, Equity Financial Planners and Wealthstone, A$813,000 and A$115,000, respectively, in representative cases that opened AMP up to 120 or more similar claims.
The findings date back to a 2019 move by AMP to slash the BOLR multiples by almost 40 per cent in a bid to contain spiralling costs as many advisers sought to exit the group post the Australian Royal Commission into financial services.
At the same time, AMP and adviser representatives have agreed to “engage in mediation, which will take place in November 2023”, the ASX statement says.
Matt Lawler, AMP advice group executive, said in release that the firm would prefer a mediated settlement.
“While we believe we have grounds on which to appeal, we also recognise the ongoing impact the proceedings are having on practices, with whom we’ve worked hard to rebuild strong and trusted relationships,” Lawler said.
“We value these relationships and that’s why we are fully committed to the upcoming mediation process in November 2023, with the aim of reaching agreement on an outcome that allows us to put this behind us.”
Neil Macdonald, head of the Advisers Association (TAA), which represents financial planners in the AMP group, said in a release that a quick, mediated solution would be in the interests of all parties.
“It has already been a lengthy, expensive, and stressful process for all our impacted members,” Macdonald said.
However, he said TAA was frustrated by the AMP appeal.
“We are extremely disappointed that AMP has chosen to appeal what was a conclusive judgement by Justice Moshinsky. We genuinely believe His Honour already took all the matters raised by AMP into consideration,” Macdonald said.
The AMP share price was flat on the news, holding at about A$1.25 last week. After dipping under A$1 during the previous 12 months, the group’s stock has rebounded almost 30 per cent since the March lows on the back of capital return news and cost-cutting.