AMP BOLR Class Action Settles
AMP BOLR class action settles for $100M. More than four years after AMP's purported changes to its Buyer of Last Resort (BOLR) scheme with advisers, and three years after the class action commenced on their behalf, AMP has announced it has settled the action for $100M. The settlement remains subject to Federal Court approval.
The class action challenged purported changes made unilaterally by AMP Financial Planning to the BOLR Policy, which formed part of the contract between AMPFP, and its network of advice businesses. Under the existing BOLR Policy AMPFP was obliged to pay advisors 4x recurring and commission-based revenue if they could not find an alternative buyer for the business. On 8 August 2019, in the aftermath of the Royal Commission, AMPFP purported to amend the BOLR policy reducing the recurring revenue multiple to 2.5x and grandfathered commission multiple to a diminishing scale starting at 1.41x and ending at 0 after 15 months. The purported changes occurred amidst an exodus of advisers as the viability of its advice business was in question after the Royal Commission.
The class action, commenced in July 2020 by Corrs Chambers Westgarth went to trial late 2022 with judgment delivered in July 2023. The Advisors' legal team, led by Senior Counsel Rob Craig KC, successfully argued that the purported changes were invalid and of no effect and that releases granted by some advisors in favour of AMPFP as they tried to leave the business, were unconscionable and ineffective. AMPFP appealed the comprehensive and complex judgment (and the lead applicants cross appealed in response), but the parties agreed to mediate in November.
A settlement was announced during the last week at $100M. The settlement remains subject to Federal Court approval where the costs, litigation funding commission, settlement distribution scheme and proposed return to group members will be considered by the Court. AMP had provisioned $50M following the July judgment in its 1H23 financial statements, but at the time analysts had speculated the damages could be somewhere between $240M and as high as $400M on a worst-case scenario.
Assuming that the settlement is approved, it will bring to an end a lengthy and no doubt exhausting period of uncertainty for the group members, who saw the potential value of businesses they had built over many years slashed overnight.
Litigation never brings about a perfect outcome, and this result will not be perfect for many of the advisors. Necessarily settlement involves compromise and advisers will not receive the precise return they would have estimated under the BOLR policy before the purported changes and subsequent three years of litigation. Advisers who exited and litigated or settled separately with AMPFP back in the immediate aftermath of the changes may not regret their decision for the years of certainty and ability to move on. But many group members who saw their main asset decimated will get some recompense.
The settlement also allows AMP to move on from the past in respect of its advice business with Hannah Wootton from the AFR reporting that AMP's share price jumped after the announcement of the settlement.
The case involved complex questions of contractual construction, in a contract constituted by multiple documents of differing levels of complexity and technicality in their drafting. By the very nature of the case and the Federal Court's findings, appeals were possible. Uncertainty could have continued for many years. For some group members there will be relief, for others it will be a bitter pill to swallow. Like any settlement, no-one leaves entirely happy.
