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IOOF fail to act in the best interest

Just a before week before the holidays, the Australian Prudential and Regulation Authority (APRA) commenced proceedings in the Federal Court to disqualify five individuals—Chris Kelaher, George Vernados, David Coulter,

Paul Vine and Gary Riordan—identified as ‘responsible persons’ at IOOF Investments Management Limited (IIML) and Questor Financial Services.

APRA Deputy Chair, Helen Rowell, said the regulator’s efforts to resolve their concerns with IOOF have been frustrated and the individuals concerned have shown a lack of understanding and contrition for their breaches of the SIS ACT and the law.

IOOF came under fire during the Royal Commission for displaying a lack of understanding when it comes to their responsibility to their super members.

In round 5 of the Royal Commission, Mark Oliver, General Manager of Distribution at the IOOF, was in the hot seat before QC Michael Hodge.

During Oliver’s questioning, Hodge addressed concerns raised by APRA since January 2013, and again during their industry-wide review in 2016 into governance arrangements between IOOF group and IIML.

Hodge said that APRA had indicated difficulties when trying to obtain accurate and current information from the IOOF Group.

If APRA is successful with the proceedings, Kelaher, Vernados, Coulter, Vine and Riordan will be disqualified from being or acting as a trustee of a superannuation entity.

The regulator also issued additional licence conditions on the entities regulated in the IOOF group.

“APRA has issued a show cause notice setting out APRA’s intention to direct IOOF Investment Management Limited (IIML) to comply with its Registrable Superannuation Entity (RSE) Licence and impose additional conditions on the licenses of IIML, Australian Executor Trustees Limited (AET) and IOOF Ltd (IL). These entities have 14 days to respond to this notice,” the regulator said

Non-compliance would put the prudential regulator in position to take further action.

APRA also issued a concise statement which ‘seeks disqualification orders’ in relation to breaches to the Superannuation Industry Supervision (SIS) ACT and prudential standards. The breach of the SIS ACT was through their approach to compensation for losses caused by Questor and IIML, where the superannuation beneficiaries were compensated from their own reserve fund.

“The actions we are now taking are aimed at achieving enduring change to ensure that the trustees of the superannuation funds operated by the IOOF fully meet this obligation to put the interests of members ahead of all other interests.”

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