Embattled financial services giant IOOF has buckled to shareholder pressure and appointed an “independent” adviser to conduct a full review of breach reporting as well as the company’s research division.
The move follows revelations in Fairfax Media of serious misconduct by senior staff including insider trading, front-running, misrepresentation of performance figures and cheating on training and compliance exams.
Explosive whistleblower testimony and a cache of internal documents seen by Fairfax, has shone a light on IOOF’s compliance. Some of the documents include a breach report from mid-2014.
Some of the documents relate to alleged front-running by the company’s head of advice research Peter Hilton. They also include a “research corrective action plan” from 2014 which refers to Hilton instructing a direct report to complete Kaplan training on his behalf.
IOOF on Wednesday again described the matter as “historic in nature”.
“IOOF believes all these issues have been addressed, including where relevant, thorough internal and board review, notifying industry regulators, ongoing review of compliance measures and controls, employee education and independent investigations.”
Despite this, IOOF has appointed PricewaterhouseCoopers to conduct a review.
PwC has already conducted a review of allegations raised by at least one IOOF whistleblowers earlier this year. According to the whistleblower, he had been told that PWC had found his claims did not have any standing. The whistleblower did not see the PWC report and requests by Fairfax Media to see the report were ignored.
“This will be a thorough review and it is our intention to inform ASIC and APRA of the outcomes.”
On Wednesday, Fairfax Media reported that the company could face a class action. That push came after the company’s share price dived 21 per cent to $8.44 on Monday.
IOOF’s recovered slightly on Tuesday, only to fall again on Wednesday following the announcement of the review. By 10.18am AEST, IOOF’s shares had allen 18c to $9.30.
PwC will assess the effectiveness of the company’s “systems, processes and controls” in regards to the reporting of incidents and breaches across the group.
“The review of the breach reporting policy and assessment of effectiveness will be undertaken immediately and an interim report will be issued containing recommendations for any improvements.”
IOOF said it had reviewed its advice research division in 2014, leading to a restructure of the unit in March 2015. The review resulted in the appointment of a new group head of research and portfolio construction.
On Tuesday, Fairfax Media revealed Mr Hilton was “on leave until further notice”, according to an email sent by IOOF chief executive Chris Kelaher to staff and financial planners within IOOF’s network.
The industry has been rocked in the past couple of years by scandals inside CBA’s financial planning division, NAB, Macquarie Private Wealth and now IOOF, which manages more than $150 billion of customer money and has 650,000 clients.
On Wednesday, Greens Senator Peter Whish-Wilson will put forward a motion calling on the Abbott government to launch a royal commission into misconduct in the financial services sector, however, with Labor and the Abbott Government refusing to support the push the motion looks likely to fail.
source:- http://www.smh.com.au
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