APRA has issued directions to companies within the major ASX-listed wealth management group for failing to comply with licence conditions.
The Australian Prudential Regulation Authority (APRA) has issued directions to companies within the IOOF group, using for the first time the broader directions powers under the Superannuation Industry (Supervision) Act 1993 (SIS Act) that were granted by parliament in April 2019.
APRA imposed additional conditions on the licences or registration of IOOF-owned subsidiaries, I.O.O.F. Investment Management Limited (IIML), Australian Executor Trustees Limited (AET) and IOOF Ltd (IL) in December 2018, after launching disqualification proceedings against five IOOF directors and executives.
“One of the additional licence conditions required each of IOOF’s APRA Regulated Entities (AREs) to implement and maintain a dedicated business function to support the AREs to meet their fiduciary obligations,” the regulator said.
“A report by Ernst & Young, the independent reviewer engaged to review the status and quality of compliance with the conditions, noted IOOF had taken positive steps towards implementing an Office of the Superannuation Trustee (OST); however, the dedicated business function was not implemented and maintained by the 31 March 2019 deadline specified in the condition.
“Following completion of a show cause process, APRA has issued directions to IIML and AET to comply with the dedicated business function condition by a new deadline of 30 June 2019. Failure to comply with a direction is an offence under section 131DD of the SIS Act and may attract a financial penalty.
“APRA’s response recognises the recent progress IOOF has made towards meeting the conditions, yet holds the IOOF entities accountable for the timely implementation of the conditions to ensure improvement to IOOF’s organisational structure, governance and conflicts management frameworks.”
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