- APRA wants to disqualify IOOF’s managing director, chairman, CFO and general counsel from working as super fund trustees.
- The prudential regulator has launched proceedings in the federal court, and issued a show cause notice, to impose additional licence conditions on IOOF.
- APRA says IOOF failed to act in the best interests of superannuation members.
Prudential regulator APRA launched court proceedings against IOOF and wants to disqualify the managing director, chairman and CFO of the financial services giant for “failing to act in the best interests of superannuation members”.
APRA has also issued a show cause notice to impose additional licence conditions on IOOF.
The action follows revelations in the financial services royal commission that IOOF, Australia’s second largest wealth manager, used members’ own money to compensate them for losses they suffered over a payment stuff up.
IOOF told APRA that its solution passed the “pub test”. APRA didn’t agree.
In September, APRA announced that the royal commission hearings had revealed “serious questions of compliance” by some super fund trustees.
Today, APRA announced a number of actions against IOOF entities, directors and executives for failing to act in the best interests of superannuation members.
APRA has started disqualification proceedings in the federal court and is seeking to impose additional licence conditions on APRA-regulated entities in the IOOF group.
The individuals in the disqualification proceedings are Managing Director Chris Kelaher, Chair George Venardos, Chief Financial Officer David Coulter, Company Secretary Paul Vine, and General Counsel Gary Riordan.
If successful, the disqualification would prohibit them from being or acting as a responsible person of a trustee of a superannuation entity.
APRA Deputy Chair Helen Rowell says APRA had tried to resolve its concerns with IOOF over several year.
However, APRA is now taking stronger action after concluding the company was not making adequate progress, or was likely to do so in an acceptable period of time.
“APRA’s efforts to resolve its concerns with IOOF have been frustrated by a disappointing level of acceptance and responsiveness to the issues raised by APRA, which is not the behaviour we expect from an APRA-regulated entity,” she says.
“The actions we are now taking are aimed at achieving enduring change to ensure that the trustees of the superannuation funds operated by IOOF fully meet their obligation to put the interests of members ahead of all other interests.
“Furthermore, the individuals included in the proceedings have shown a lack of understanding of their personal and trustee obligations under the SIS Act and at law, and a lack of contrition in relation to the breaches of the SIS Act identified by APRA.”
In a statement, IOOF says it is disappointed that APRA seeks to impose licence conditions, has started court proceedings and issued a show cause notice.
“IOOF has been working cooperatively with APRA to actively implement various agreed initiatives, which were most recently outlined at the 2018 Annual General Meeting,” the company said.
“The historical matters the subject of the proceedings were disclosed to APRA a number of years ago. IOOF has already addressed or is addressing them, and it has been constructively working with APRA to this end.
“IOOF will continue to actively progress the agreed initiatives and will further consider the allegations raised by APRA.
“However, IOOF believes that these allegations are misconceived, and it and its executives intend to vigorously defend the proceedings.
“Given that these matters are the subject of court proceedings, IOOF does not propose to comment further at this stage.”