Financial services group AMP (ASX: AMP) has agreed to pay $100 million to settle a class action brought by financial advisers who had their exit payments dramatically cut by the company in 2019.
The payout follows a Federal Court ruling in July that found in favour of the financial advisers, including lead applicant Equity Financial Planners which claimed losses of $813,560 from AMP’s actions.
AMP landed in hot water in 2019 after making a strategic move to cull the scale of its financial advisor network.
Through its AMP Financial Planning (AMPFP) arm, AMP cut payments to financial planners that it had sought to shed from its network to 2.5 times the value of their ongoing revenue from four times previously.
The class action alleged that this change made by AMPFP to its Buyer of Last Resort (BOLR) policy was invalid.
While AMP made a provision of $50 million in its FY23 first-half results following the Federal Court ruling on 5 July 2023, news of the $100 million settlement has led to an immediate impact on AMP shares which rose almost 9 per cent to a high of 82.5c in early trading.
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