On 7 December 2018, the Australian Prudential Regulation Authority (APRA) announced a number of actions against IOOF entities (ASX: IFL), directors and executives as they fail to act in the best interests of superannuation members.
APRA has started the disqualification proceedings and is planning to impose additional license conditions. APRA is also going to issue directions to APRA-regulated entities in the IOOF group. Further APRA has also started the proceedings in Australia’s Federal Court for the disqualification of 5 individuals that were responsible for IIML and Questor Financial Services Limited.
IOOF’s Managing Director (MD) Mr. Chris Kelaher, Chairperson Mr. George Venardos, CFO Mr. David Coulter, General Manager Mr. Paul Vine and General Counsel Mr. Gary Riordan are the individuals who are included in the disqualification proceedings.
As per APRA’s Deputy Chair Helen Rowell, APRA has been trying to resolve its concerns with IOOF for many years, however, IOOF was not making adequate progress, which is why APRA decided to take stronger action. If APRA gets through with its disqualification proceedings it would prohibit the above individuals from being or acting as a responsible person of a trustee of a superannuation entity.
Through the proceedings, APRA is also seeking a court declaration that IIML and Questor breached the SIS Act and APRA also considers that IIML, Questor and the relevant individuals did not appropriately acknowledge and address issues concerning conflicts of interest raised by APRA from 2015 to date.
APRA has identified three separate occasions in 2015, in which Questor and IIML contravened the SIS Act by differentially compensating the superannuation beneficiaries and other non-superannuation investors for losses caused by Questor, IIML or their service providers. This means that the superannuation beneficiaries were compensated from their own reserve funds rather than the trustees’ own funds or third-party compensation.
Following the APRA’s announcement, Australia and New Zealand Banking Group Limited (ASX: ANZ) provided an update on the sale of its Wealth businesses. Earlier in the month of October 2017, ANZ announced regarding the sale of its OnePath Pensions and Investments business to IOOF.
With regards to the APRA’ action, ANZ’s Deputy CEO Mr. Alexis George said the bank is planning to seek the urgent information from both IOOF and APRA and it is going to assess the various options available.
He added further that the work to separate Pensions and Investments from ANZ’s Life Insurance business will continue and there is a framework available to complete the Zurich transaction that does not involve IOOF. The share price of ANZ is up 0.429 percent on 7 December 2018.
In the last six months, the share price of ANZ decreased by 3.21% as on 6 December 2018 and traded at a PE ratio of 11.810x. ANZ’s shares traded at $25.780 with a market capitalization of circa $73.62 billion as on 7 December 2018 (AEST 12:30 PM). On the other hand, IFL was down -34.868%.