AMP caught up in adviser dispute
AMP has found itself in the middle of a dispute between two authorised financial advisers (AFAs) that has spilled over into the courtroom.
Thursday, November 15th 2012, 8:17AM 10 Comments
Details of the dispute between ex-AMP adviser Bryan Tucker and his former business partner Edwin Longman were revealed in a recent High Court judgment.
In 2010 the two men merged their AMP broking businesses, with Longman’s business Waikato Insurance and Financial Services Limited (WIFSL) transferring its clients to Tucker’s firm Inrich in exchange for a 61% shareholding.
They agreed to separate their interests after Tucker resigned as an AMP agent due to a dispute with the provider; Longman wanted to stay with AMP.
Following his resignation as a director of Inrich in January this year Tucker became concerned about some payments being made by Inrich to Longman, who was now the company’s sole director.
Tucker passed a shareholder’s resolution (relying on Companies Office records still showing him as sole shareholder) removing Longman as director and replacing him with a man named Jordan Paterson.
Paterson then removed Longman as an employee of Inrich, leaving the company without an AMP agent to look after its clients.
As a result AMP exercised its “step-in” rights under its agency agreement with Inrich and began servicing the clients through its call centre staff.
“However, this is not a satisfactory arrangement in the long-term,” Justice Murray Gilbert said in his judgment. “All parties agree that the clients should be serviced by an advisor and that the value of the client book will diminish unless this occurs.”
AMP proposed to sell the commission rights to another adviser but WIFSL didn’t want these rights to be sold to another adviser, nor did it want to have to pay to re-acquire them.
WIFSL claimed Inrich failed to pay a cash purchase price of $450,000 allegedly due and issued proceedings seeking to have the commission rights re-vested to it.
It applied for an interim injunction preventing the commission rights being sold and preventing Tucker or Paterson from contacting the clients until this matter had been dealt with by the court.
However, Justice Gilbert denied the application, saying the evidence showed the purchase price was never intended to be paid in cash but rather in WIFSL’s 61% shareholding.
“WIFSL’s rights will not be infringed by Inrich contacting any of the clients transferred to it. Similarly, WIFSL’s rights will not be infringed if AMP pays the commissions to Inrich or if Inrich disposes of the commission rights,” the judge said.
“It is not disputed that AMP has the right to dispose of the commission rights to another AMP advisor. AMP will not infringe WIFSL’s rights by doing so.”
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