The prudential regulator has taken legal action to ban three IOOF executives and two IOOF directors, including managing director Chris Kelaher, from running a super fund for failing to act in the best interests of members.

Since news of the multiple APRA actions on Friday, ANZ said it was “assessing its options” in relation to its October 2017 sale of OnePath Pensions and Investments business to IOOF.

“Given the significance of APRA’s action, we will assess the various options available to us while we seek urgent information from both IOOF and APRA,” ANZ deputy chief executive Alexis George said in a statement.

“The work to separate pensions and investments from our life insurance business continues. There is a framework available to complete the Zurich transaction that does not involve IOOF,” George stated.

In October last year, IOOF announced it had entered into an agreement to buy ANZ’s OnePath Pensions and Investments business and its aligned dealer groups for close to $1 billion. This deal was supposed to bring ANZ’s aligned brands – including FS Partners, Retire Invest, Millennium 3 and Elders FP,  together with IOOF’s Shadforth, EWM, Consultum, Bridges, Lonsdale, and Ord Minnett FP.

On Friday APRA said it had commenced legal proceedings in the Federal Court to seek to ban the IOOF directors and executives who, at relevant times, were responsible persons of IOOF Investment Management and Questor Financial Services.

In addition to Kelaher, the other four individuals are named by APRA were chair George Venardos, chief financial officer David Coulter, general manager – legal, risk and compliance and company secretary Paul Vine, and general counsel Gary Riordan.

At the same time as it said it as taking legal action, APRA said it was seeking to apply additional licence restrictions on IOOF.  APRA has given IOOF 14 days to explain why it should not be subject to these sweeping licence conditions.

Helen Rowell, the deputy chair of APRA, said it had sought to resolve its concerns with the wealth manager “over several years,” but considered it necessary to take action after determining the company was not making “adequate progress”.

“APRA had sought to resolve its concerns with IOOF over several years but considered it was necessary to take stronger action after concluding the company was not making adequate progress, or likely to do so in an acceptable period of time,” she said in a statement.

Rowell criticised the executives it was taking action against for “showing 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.”

The concise statement associated with the action seeks disqualification orders and declarations in relation to breaches of sections 52 and 55 of the Superannuation Industry (Supervision) Act and Prudential Standards, and associated conduct.

In a statement to the ASX on Friday IOOF said it was “disappointed” that APRA had sought to “impose licence conditions, commenced the proceedings and issued the show cause notice”.

“IOOF has been working cooperatively with APRA to actively implement various agreed initiatives, which were most recently outlined at the 2018 annual general meeting. The historical matters the subject of the proceedings were disclosed to APRA a number of years ago. IOOF has already addressed or is addressing them, and it has been constructively working with APRA to this end,” said the wealth manager.

In August the Hayne royal commission heard that IOOF counted on disengaged super members with low balances and clients with financial advisers on trail commissions not moving to a lower-fee product introduced this year.

Almost half the members of IOOF’s Super Choice Fund would be better off on the new fee regime but were considered a low “arbitrage risk” to migrate by themselves, IOOF distribution manager Mark Oliver told the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Super Choice would have suffered an $8 million-a-year hit to revenue if all members migrated to the new regime, which was expected to benefit more than 29,000 existing members, 20,000 of whom have a grandfathered commissions with advisers, documents lodged with the court revealed.

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