The AMP Ltd (ASX: AMP) share price has returned from a brief pause this morning and dropped into the red.
At the time of writing, the financial services companyâs shares are down 3.5% to $1.10.
Why is the AMP share price falling?
Investors have been hitting the sell button this morning after the company was dealt a blow in the Federal Court of Australia.
This was in relation to proceedings brought against the company on behalf of advice practices authorised by AMP Financial Planning (AMPFP) as of 8 August 2019.
The release notes that the proceedings challenged the validity of some of the changes made by AMPFP to its Buyer of Last Resort (BOLR) policy in August 2019.
Unfortunately for AMP, the Federal Court has ruled in favour of the claims of the lead applicant and sample group member.
The Court accepted evidence of the loss incurred by the two group members, the lead applicant (Equity Financial Planners – $813,560) and the sample group member (Wealthstone – $115,533).
Whatâs the damage?
The overall damage from the claim is unclear at this stage as the Court only determined amounts payable to the lead applicant and the sample group member only.
Subject to any appeal, a process will be required to determine the impact of the decision on other group members.
AMP advised that the matter is very complex. As a result, it is still reviewing the judgment in detail to determine the full effect and the next steps that it takes.
The company plans to provide the market with an update in due course.
Despite today’s decline, the AMP share price is still up 11% over the last 12 months.
