Good Returns has obtained an update sent to members of the AAA Advisers Association - formerly known as the AXA Advisers Association - which says providers are producing Letters of Agreement that try to limit their liability under the Financial Advisers Act.

“No doubt each of these providers has had a legal opinion to support their view.  The AAA does not agree with this position and has obtained two legal opinions which contradict this view,” the letter from the AAA said.

“We believe that contracting out of the Act to avoid liabilities created by the adviser force is contrary to the spirit and meaning of the Act and its central intention of protecting the client. AMP is one of these providers.”

The AAA said there are three options for advisers who want an agreement with AMP: join the AMP QFE; stay on the current agreement which will be changed to include the auditing of adviser files and the establishment of an approved product list; or move to a more independent form of agreement.

It is option three and its offending clauses which is causing the concern, according to the AAA.

“The AAA Board believe option three will be the choice for a significant number of our members because the element of our independence is important to so many advisers, so it is imperative we get option three right.

“As an aside, we also think that AMP is struggling with the concept of advisers who are independent of AMP and yet have become an integral part of its distribution network by way of the AMP’s purchase of the AXA book.”

AMP, it said, is concerned that if it holds an agreement with an adviser it will be held responsible for advice that adviser gives on another provider’s products.

“AMP, as a gesture of goodwill, has allowed the AAA to craft an amended wording for the letter of appointment. This amended document will be submitted to AMP for their consideration and legal sign off,” the AAA update said.

“We understand and agree that AMP should not be held liable for advice given by AAA advisers on products provided by other suppliers. This is in essence the amendment that we are offering as compromise.

“However, when we place business with AMP/AXA would expect it to stand behind its products and processes. We feel that the liability posed by a fully trained and accredited AAA adviser is limited and acceptable as part of traditional business practise.”

AAA president John Wood couldn’t be reached for comment yesterday.  AMP wasn’t able to respond in time for the deadline, but has promised a response today.