Worried about AMP and BOLR? Don’t ask ASIC
The Australian Securities and Investments Commission (ASIC) has done its utmost to step around parliamentary committee questioning about its views on the manner in which AMP Limited has handled its relationship with financial advisers and buyer of last resort (BOLR) arrangements.
Asked highly pointed questions by Victorian Liberal back-bencher, Julian Hill ASIC declined to speculate about the intentions of the Royal Commission and also declined to speculate about what thinking and decision-making may have transpired within AMP.
Hill asked a question noting that “the committee has received evidence of substantial reductions in the practice values of AMP financial planners under the AMP Buyer of Last Resort scheme and the transition away from grandfathered commissions” before asking “Did the Royal Commission anticipate the destruction of practice values (small businesses in effect) in the transition away from grandfathered commissions?”
ASIC’s formal answer was that: “ASIC cannot speculate as to whether the Royal Commission anticipated the ‘destruction of practice values in the transition away from grandfathered commissions’.”
Hill then noted that “AMP’s audit of its financial planners seems to have further reduced practice values by applying 2020 compliance standards to transactions and practices that occurred in the previous one or two decades. What drove this? Why was it done? Who determined the audit standards and methodology? What were they and why? What view and role does ASIC have with respect to the methodology and application of the audit process to financial planners?”
ASIC answered as follows: “ASIC cannot answer questions about AMP’s motivations, reasoning and decision-making. ASIC has no role in relation to the methodology and application of the audit process to the determination of rights under the Buyer of Last Resort contracts between AMP and is representatives.”
“ASIC, in its role as financial services regulator, is responsible for ensuring that AMP complies with its financial services obligations, including its obligations to ensure that its representatives, such as financial advisers, comply with the financial services laws. In complying with these obligations AMP may conduct audits of its financial advisers.”
The Liberal back-bencher then asked about the three-year restraint of trade clauses imposed by AMP on its financial planners as part of the scheme noting that [they] “seem unreasonably harsh in the circumstances. Further, it is difficult for those subject to restraint of trade clauses to litigate them. Does ASIC have a view or a role with respect to the restraint of clauses being imposed by AMP on its financial planners? If ASIC does not have a role, which regulator does?”
ASIC answered that it did “not have a view or role with respect to the restraint of trade clause”.
“Based on ASIC’s understanding of the Buyer of Last Resort agreements, ASIC is not aware of any regulator that has a specific legislative role in relation to restraint of trade clauses in those agreements.”
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