APRA is seeking to impose additional licence conditions on IOOF and ban a number of senior executives and directors from acting as superannuation trustees.
Documents filed in the Federal Court of Australia on 6 December 2018 reveal that the Australian Prudential Regulation Authority (“APRA”) is seeking disqualification of five responsible persons of the trustee of IOOF Investment Management Limited (“IIML”). IIML is IOOF Ltd’s (“IOOF”) superannuation arm. IOOF’s share price was down some 35.4% to $4.62 at 2:25 AEDT on 7 December, its lowest value in nine years.
The disqualification proceedings list IOOF Managing Director Chris Kelaher, Chairperson George Venardos, Chief Financial Officer David Coulter, General Manager (Legal, Risk and Compliance) and Company Secretary Paul Vine, and General Counsel Gary Riordan. Additionally, APRA is seeking declarations that Questor Financial Services Limited (“Questor”) (IOOF’s investment manager) and IIML breached the Superannuation Industry (Supervision) Act 1993 (Cth) (“SIS Act”). The breach relates to section 52 of the SIS Act, which requires the trustee of a superannuation fund to act in the best interests of the fund’s beneficiaries. If the disqualification proceedings are successful, the five individuals will be banned from acting as responsible persons of the trustee of a superannuation entity.
The proposed RSE licence conditions would require significant change to the management of conflicts of interest by IIML, Australian Executor Trustees Limited (“AET”) and IOOF. APRA is concerned about those entities’ organisational structures, governance, and conflicts management frameworks. APRA’s Concise Statement alleges that IIML, Questor and the responsible persons identified above did not appropriately acknowledge and address issues relating to conflicts of interest that were first raised by APRA in 2015. They include allegations that in response to losses caused to beneficiaries by IIML, Questor or their service providers, IIML and Questor compensated beneficiaries from their own superannuation reserve funds, rather than the trustees’ own funds or third-party compensation.