Prudential regulator APRA is seeking to ban five senior executives from financial services giant IOOF, deeming them not “fit and proper” to run a super fund.
In a statement on Friday, APRA said IOOF’s senior management team “have shown a lack of understanding of their personal and trustee obligations” to members, and aren’t appropriate people to manage a super fund.
APRA is seeking to have the five IOOF executives – managing director Chris Kelaher, chairperson George Venardos, chief financial officer David Coulter, general manager of legal, risk and compliance, company secretary Paul Vine, and general counsel Gary Riordan – disqualified from being a super fund trustee in the federal court.
“If successful, the disqualification proceedings would prohibit the above individuals from being or acting as a responsible person of a trustee of a superannuation entity,” APRA said.
APRA has raised numerous concerns with IOOF over its conduct and management since 2015, and said that the five executives now facing court “did not appropriately acknowledge and address issues concerning conflicts of interest” identified by the regulator.
Shares in the company saw the value drop more than 35 per cent by 2:30pm, continuing a downward slide that’s wiped it’s price from $11.32 per share on January 5 2018 to today’s price of $4.62.
Mr Kelaher came under fire in August this year after the royal commission heard an IOOF subsidiary, Questor, tried to hide a $6.1 million error from its investors.
A week later, the royal commission heard from APRA that it lacked the powers it needed to force IOOF to act in the best interests of its super members despite identifying potential problems as early as 2012.
New rules for IOOF
In addition to taking IOOF’s senior management team to court, APRA has imposed new conditions on the business’ financial services license, and the licenses of businesses owned by the company.
These conditions “seek to achieve significant changes to the identification and management of conflicts of interest” of IOOF Investment Management Limited (IIML), Australian Executor Trustees Limited (AET), and IOOF limited (IL).
“The proposed additional conditions on the licences of IIML, AET and IL are based on issues and concerns raised by APRA since 2015 relating to the entities’ organisational structure, governance and conflicts management frameworks, and require the entities to address these within specified timeframes,” APRA said.
‘These allegations are misconcieved’
IOOF responded to APRA’s actions in a statement shared via the ASX, saying the business is “disappointed” with the regulator’s decision.
“IOOF has been working cooperatively with APRA to actively to implement various acres initiatives, which were most recently outlined at the 2018 Annual General Meeting,” the statement 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.”
ANZ, who last year agreed to sell its wealth management business to IOOF, also weighed in on the possible disqualifications and licensing conditions.
“Given the significance of APRA’s action, we will assess the various options available to us while we seek urgent information from both IOOF and APRA,” the bank’s deputy chief executive Alexis George.
“The work to separate Pensions and Investments from our Life Insurance business continues. There is a framework available to complete the Zurich transaction that does not involve IOOF.”
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