IOOF has flagged its remediation of advice customers will take two more years, as it restructures its expanded wealth business following an acquisition that has proved unpopular with shareholders.
Speaking at IOOF’s AGM on Wednesday, the group’s chief executive Renato Mota said IOOF had “commenced payments to clients” during the 2020 financial year and expected the remediation program would be “substantially complete” by the end of FY22.
The group was grilled by the House economics committee at the end of last year for being slow to start on its remediation procedures, with an estimated $183 million owed to customers for past poor advice and fees for no service that had yet to be paid back.
IOOF had engaged external consultants to conduct a detailed analysis that took more than six months before customers began to be refunded, according to Mr Mota’s previous evidence at the hearing.
Mr Mota flagged that IOOF’s new-look advice business following its acquisition of MLC in August would be focused on a “simpler, more cost-effective business model” as it seeks to be “at the forefront of financial advice and the broader wealth management strategy”.
“The need to create a professional and self-sustaining advice business has never been more apparent”, he said.
“That is, building a business model that is sustainable in its own right, without economic support from other parts of the business and creating new opportunities through investment in technology and customisation.”
Mr Mota added that with the reorganisation of IOOF’s advice brands through its “Advice 2.0” strategy, the company’s aligned dealer groups were expected to become self-sustaining by the end of 2022.
Despite rumbles of a possible shareholder revolt following the MLC acquisition, which has seen IOOF’s share price plummet, all motions at the AGM were carried successfully.
Shareholders voted almost 80 per cent in favour of the group’s remuneration report, while board member Elizabeth Flynn faced a tight vote with 24.8 per cent of shareholders against her re-election.