AMP’s BOLR class action appeal kicks can down road

ANALYSIS

As AMP Limited opts to appeal its loss in the Federal Court Buyer of Last Resort (BOLR) class action, it is worth reflecting that little more than a month ago it announced it had provisioned just $50 million before tax for that eventuality.

The $50 million provision raised eyebrows. Many suggested they had expected a much larger number.

The appeal against the Federal Court decision means that by the time AMP reports its full-year results in early February, next year, its appeal process will likely still be on foot, even if allowing for the remediation process kicking off in November.

Thus, win, lose or draw, whatever damages the court might decide should be imposed on AMP over its BOLR conduct will not hit the company’s balance sheet much before its half-year results in August, 2024, and possibly a good deal later.

Little wonder, then, that The Advisers Association (TAA) chief executive, Neil Macdonald expressed his organisation’s extreme disappointment.

He said that AMP had “chosen to appeal what was a conclusive judgement” on the part of Federal Court judge, Justice Mark Moshinsky.

He said TAA genuinely believed the judge had taken into account all the matters raised by AMP as part of its appeal.

It was clear from comments by AMP Limited Group Executive, Matt Lawler that AMP was sensitive to the impact of its appeal decision on its relationships with its remaining financial advisers.

He stressed that the company wanted the mediation process to work.

“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.”

Asked his opinion on the AMP provision, Macdonald said that it was hard to judge what damages might flow from the Federal Court’s decision because of the different circumstances impacting advisers who were part of the class action.