IOOF and its super trustee, IIML, continually failed to understand their duties to super members and may have breached the law, the royal commission has found.
In a document released late on Friday, the royal commission laid out a number of findings that it said were open to commissioner Kenneth Hanye to find in relation to IOOF.
As reported by InvestorDaily on 10 August, the royal commission heard damning evidence about IOOF that raised serious questions about the company’s handling of conflicts of interest.
IOOF structured its super funds with what is known as ‘dual regulated entities’ (DREs) – whereby the same entity is the trustee of a super fund as well as the responsible entity for a number of managed investment schemes.
One of IOOF’s DREs, Questor (which is no longer operating), may have breached s52(2)(c) of the SIS Act by reducing distributions to unaffected members of The Portfolio Service Retirement Fund (TPS), using the general reserve to compensate those members (and subsequently refusing to replenish the general fund), according to the royal commission.
The paper also said it is open to the commissioner to find Questor may have breached s52(2)(d) of the SIS Act by giving priority to the interests of ‘IDPS-like’ members by wholly compensating them with settlement money from NAB subsidiary NCS, while partly compensating TPS members from the general reserve.
IIML may have also breached s52(2)(c) of the SIS Act and prioritised its own interests over the interests of superannuation members by failing to move them over to a cheaper, non-grandfathered product, found the commission.
IOOF’s trustee IIML also engaged in conduct “falling below community standards” when it made representations to APRA in a 19 April 2017 letter where “it had no reasonable basis to do so”.
“It is open to the commissioner to find that the continued failure of IIML and IOOF Holdings to understand their duties to superannuation members, and to take steps to properly recognise and manage conflicts of interest, constitutes conduct falling below community standards and expectations,” said the commission.
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