APRA sends shockwaves through the super industry

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The Australian Prudential Regulation Authority (APRA) has reacted to stinging criticism in the banking royal commission by taking off its gloves and making its most aggressive move in a decade.

The regulator is suing wealth manager IOOF and some executives for not acting in the best interests of superannuation members, in what will be its first court action in 10 years.

The move may signal the end of APRA’s soft touch policy for dealing with misbehaving funds and financial entities.

In a landmark lawsuit, APRA plans to ban top executives at one of the nation’s biggest wealth managers which, if successful, could send the $2.8 trillion industry into a spin.

APRA alleges that IOOF chief executive Chris Kelaher, chairman George Venardos and three other executives are not fit to manage retirement savings.

“It is highly significant that APRA has taken this public action. The royal commission has created an environment in which it’s possible for APRA to exercise its powers,” said Gail Pearson, a University of Sydney Business School professor.

The move will send shockwaves through the super industry, she said. “I think it will give other trustees pause for thought.”

In conjunction with the court action, APRA has also told IOOF that it needs to restructure its business, saying that its existing structure has created conflicts of interest.

IOOF’s superannuation arm, with its 500,000 members, is run by a board consisting of IOOF company executives and directors. APRA accused them of working in the best interests of IOOF shareholders and not in the interests of superannuation members.

If APRA is successful, the IOOF executives will be banned from acting as superannuation trustees; however, they will still be able to be executives, directors and work in financial services.

News of the case has already decimated IOOF’s share value, with the stock nosediving 36 per cent on Friday.

The case will also hinder IOOF’s planned acquisition of ANZ’s OnePath fund, with the bank saying it will now need to reconsider the sale in the wake of APRA’s court action.

IOOF has been under investigation for compliance arrangements, breach reporting, management of conflicts of interest, staff trading policy, disclosure, whistleblower management and protection and cyber security.

IOOF said it plans to vigorously defend the APRA action.

Are you pleased that APRA is finally taking legitimate action against a misbehaving financial entity? Have you been affected by IOOF’s share price dive?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

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34 Comments

Total Comments: 34
  1. 0
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    One big problem here. The consumer will pay for this.

    • 0
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      The consumer has been paying for years. Don’t you know anything?

    • 0
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      The consumer is damned no matter what. Damned if the rorts go on. Damned if action stops them. And the culprits never suffer.

    • 0
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      and who will pay for the banks indiscretions ?consumers.

    • 0
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      Making those responsible pay for their actions & getting the industry to comply with the regulations is a small price to pay in the long term. Let’s hope we see some jail time if any criminal activity is uncovered. Can’t go after their money though as they have most likely put all that off shore or in the wife’s & dogs name.

    • 0
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      Good call maelcolium.
      The job of APRA is to stop rotten management and fraud. Like all regulators it has not been doing its job for decades.

    • 0
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      Should be clearly commanded that they must pay for their malfeasances out of their operating revenue and not seek to impose additional costs on account holders in any way… if they are guilty of deliberate wrongdoing, all costs should come out of their personal cash and assets.. RICO the bustards….

      That first of course will hit the stock market and shareholders… but you can’t have everything…

      It’ll all settle down and like parties in government, once the fur and feathers settle, it’s just a step back to business as usual. Susan Leys of the Gold coast rorts is back in the Ministry… can’t keep a bad woman down….

    • 0
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      The consumer always pays. May as well get some satisfaction as stringing them up is not an option unfortunately.

      The way it is going nobody will have any money to consume apart from the new foreign owners of everything.

  2. 0
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    Yes, I’m pleased that APRA is finally showing some grit and doing the job it has always been tasked with. Super funds have had it too good for many years because there is outdated legislation that has remained virtually unchanged since Keating legislated compulsory super in 1992. We need APRA to continue to seek out those fund managers who are ripping funds from members as well as a bipartisan approach to drafting up-to-date legislation to bring the funds up to the modern era.

    I’m not sure if Keating envisaged the amount of funds that are currently held by super funds but it amounts to trillions on dollars, a figure too large to fully comprehend. I don’t subscribe to the funds being controlled by a government entity but I feel that the current system is adequate. Members should be able to choose the fund that suits their purposes and should be free to move funds as they wish. The market will always decide which funds are the ones that are performing best.

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      Wow….you mean Retail Fund managers need to be held accountable? That’s a big call from you OM.
      I’m sure Keating would have the growth of the funds modelled for him. Guess who now wants a part of the action? BOTH sides of politics.

    • 0
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      I like the Coen’s True Grit… Jeff Bridges is brilliant as Rooster Cogburn… oh.. sorry.. wrong grit…

      Single roof super out of government and leeches hands….

  3. 0
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    all those fee’s are adding up,too many super funds,too much management

  4. 0
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    We can only hope IOOF is sold off to a European company just as AMP sold out of its life business. Who needs odd fellows in OZ.
    Its about bloody time APRA did their job. Good for them! But I must say if they were doing their job we would not have needed the RC!

  5. 0
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    Appalling.
    The back story on this is that IOOF’s senior executives told APRA and it’s incompetent beauracy of civil servants to “nick off” and stop meddling with, what they rightly saw as their management responsibilities.
    Now watch APRA try to lower the boom in return.

  6. 0
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    I don’t know anything about IOOF, but the Commonwealth Bank/Colonial First State in September 2018 told me I was not entitled to a refund for ‘fees for no service’ and then not entitled to any interest/compensation.

    It just proves that ‘banking misconduct’ has progressed to ‘incalcitrant conduct’ and the EOs of the bank are not supervising their employees to make sure they comply with the Royal Commission’s enforcements.

  7. 0
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    Thank God the Trade Unions set up Industry Super Funds ,the banks and retail funds were sending me broke.

    • 0
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      It’s amazing how LNP and big banks and financials and IPA have been so critical about industry funds and wanting to change the way they are managed so the private companies can get a bigger share. No wonder LNP didn’t want the royal commission – the industry funds are the only ones they couldn’t find a single problem with.

    • 0
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      Industry funds were spending members returns on advertising, paying union reps exorbitant fees and donating to the labor party.

    • 0
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      … and paying overall more to member’s accounts than retail….

    • 0
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      WoW well fk me with a barge pole, if union reps where paid exorbitant fees it must of been in the millions just like all the CEO’s & senior exec’s of retail funds, boy are they going to be ticked off.

  8. 0
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    When is APRA going to take action against Industry Funds and their directors ???

  9. 0
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    LOTHARIO YOU ARE STILL A FOOL.

  10. 0
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    “not acting in the best interests of superannuation members’… hmmmm… sounds very subjective to me unless there is clear evidence of deliberate wrongdoing and shuffling of money around for self-interest….

    Just saying – not defending anyone… just looking at the possibility this might be a waste of time.. like… say.. a Royal Commission into Unions….

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