IOOF shares plunge 30% as regulators take court action to blow top management out of their jobs

• Shares in $125 billion Australian financial services giant IOOF have crashed 30% after the prudential regulator APRA filed court proceedings seeking to disqualify its top management.

• APRA wants to ban the MD, chairman, and CFO for "failing to act in the best interests of superannuation members", following revelations in the financial services royal commission.

Share in IOOF fell hard after prudential regulator APRA announced court action against the financial services giant over its treatment of superannuation fund members.

A short time ago, the shares were down 30% to $4.93. They have more than halved in value over the last 12 months, down from a high of $11.38.

APRA has launched court proceedings against IOOF and wants to disqualify the managing director, chairman and CFO of the financial services giant for “failing to act in the best interests of superannuation members”.

The regulator has also issued a show cause notice to impose additional licence conditions on IOOF.

The action follows revelations in the financial services royal commission that IOOF, Australia’s second largest wealth manager, used members’ own money to compensate them for losses they suffered over a payment stuff up.

IOOF has funds under management, administration and advice (FUMA) of $125.9 billion. In the year to June, net inflows were up 28% to $5.8 billion.

In September, APRA announced that the royal commission hearings had revealed “serious questions of compliance” by some super fund trustees.

Today, APRA announced a number of actions against IOOF entities, directors and executives for failing to act in the best interests of superannuation members.

The individuals in the disqualification proceedings are Managing Director Chris Kelaher, Chair George Venardos, Chief Financial Officer David Coulter, Company Secretary Paul Vine, and General Counsel Gary Riordan.

Disqualification would prohibit them from being or acting as a responsible person of a trustee of a superannuation entity.

APRA says it tried to resolve its concerns with IOOF over several years.

“APRA’s efforts to resolve its concerns with IOOF have been frustrated by a disappointing level of acceptance and responsiveness to the issues raised by APRA, which is not the behaviour we expect from an APRA-regulated entity,” says APRA Deputy Chair Helen Rowell.

“The actions we are now taking are aimed at achieving enduring change to ensure that the trustees of the superannuation funds operated by IOOF fully meet their obligation to put the interests of members ahead of all other interests.

“Furthermore, the individuals included in the proceedings have shown a lack of understanding of their personal and trustee obligations under the SIS Act and at law, and a lack of contrition in relation to the breaches of the SIS Act identified by APRA.”

APRA’s move to impose additional licence conditions on IOOF may have implications for the ANZ Bank’s sale of its wealth business.

The bank says it is urgently seeking information from both IOOF and APRA.

ANZ in October last agreed to sell its OnePath Pensions and Investments business to IOOF for $975 million.