AMP share price jumps after $100m class action settlement

afr.com:

AMP will fork out $100 million to exiting financial planners as part of a proposed settlement over its controversial adviser payout policy, after it lost a class action over the scheme in July.

But analysts previously predicted the financial services giant could be on the hook for even more than this amount over the case, warning that the issue could lower capital returns for years.

AMP will pay more than $100 million to exiting financial advisers under a proposal to bring a long-running class action to an end. Peter Rae

Its share price jumped 6.7 per cent to 90¢ on Thursday after it announced the smaller settlement sum. The company had provided for a $50 million payout in its first-half financial statements over the issue.

The class action was brought against AMP after the company changed its buyer of last resort policy in 2019. The change meant financial planners operating under the AMP brand could sell their client books to the company with 12 months’ notice at 2.5 times the value of ongoing revenue. Previously the figure had been four times ongoing revenue.

The advisers had claimed that AMP was using changes to its business structure forced by the Hayne royal commission to unfairly proceed with its policy rethink, when its actual motivation was cost savings and protecting itself from an anticipated drop in advice work.

Federal Court judge Mark Moshinsky ruled the scheme was invalid in July, meaning AMP would have to pay exiting financial planners almost double what it had proposed.

He ordered AMP to pay $929,000 in damages to the lead and sample plaintiffs, but the final damages bill was unclear as thenumber of advisers who used the scheme and the value of their businesses was unknown.

In July, analysts warned that