December 11, 2018
The Chief Executive of IOOF, Chris Kelaher, and the Chair of its board, George Venardos, have stepped aside from their roles after APRA announced it would be taking action against the company for failing to act in the best interests of superannuation members.
APRA stated it had commenced disqualification proceedings in the Federal Court of Australia against Kelaher and Vernardos, as well as against Chief Financial Officer, David Coulter, General Manager – Legal, Risk and Compliance and Company Secretary, Paul Vine, and General Counsel, Gary Riordan.
The regulator would also seek to issue directions to IOOF Investment Management Limited (IIML) and impose additional conditions on the licenses of IIML, Australian Executor Trustees Limited (AET) and IOOF Ltd (IL).
APRA added that it had taken action to address the identification and management of conflicts of interest by IIML, AET and IL and are based on concerns raised since 2015 around the entities’ organisational structure, governance and conflicts management framework.
The court proceedings against the five senior figures are based on them being responsible persons of IIML and Questor Financial Services Limited, which were RSE licensees owned by IOOF Holdings, and are alleged by APRA to have breached the SIS Act.
Specifically, APRA claims that Questor and IIML contravened the SIS Act by deciding to compensate superannuation beneficiaries and other non-superannuation investors for losses caused by Questor, IIML or their service providers, from their own reserve funds rather than the trustees’ own funds or third-party compensation.
APRA Deputy Chair, Helen Rowell said the regulator had tried to resolve its concerns with IOOF but considered it necessary to take stronger action after a slow response from IOOF and a lack of understanding of their trustee obligations by the five people named in the proceedings.
IOOF stated that Kelaher and Venardos agreed to step aside while the APRA proceedings took place and will be on leave as they defend the actions brought against them. They will be replaced in the interim by Renato Mota, Group General Manager – Wealth Management and Allan Griffiths, a current non-executive Director of IFL, respectively
Coulter, Vine and Riordan will remain in their positions but will have no responsibilities in relation to the management of the IOOF trustee companies and no engagement with APRA during the course of its action.
The news of the APRA investigation has also led to ANZ announcing it would be examining its impact on the sale of the bank’s financial advice, investments and pension business to IOOF.
In a statement released to the ASX, ANZ Deputy Chief Executive, Alexis George said, “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 ongoing sale of OnePath to Zurich would not be affected by the APRA action, according to George, who added, “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”.
Commenting on the ANZ sale, Griffiths said, “We remain committed to the ANZ transaction and we are working cooperatively with ANZ as they consider their position”.