The Federal Court has issued a sweeping vindication to IOOF, dismissing the financial regulator’s case against it and granting the wealth manager court costs.
The Australian Prudential Regulation Authority had sought to disqualify as superannuation trustees IOOF’s chief executive Chris Kelaher, non-executive director George Venardos and three other executives
It had also sought to impose licence restrictions on IOOF Investment Management Limited and Questor Financial Services Limited, alleging they had not acted in the interests of superannuation fund beneficiaries in several alleged conflicts of interest.
In a 307-page decision issued on Friday, judge Jayne Jagot disagreed, ruling that the internal IOOF documents that APRA relied upon to try and show conflicts of interest were unpersuasive.
APRA, Justice Jagot wrote, relied on the doctrine of res ipsa loquitur – “the thing speaks for itself” – “when the one thing that is clear is that the facts of the incidents in question in this case by no means speak for themselves.”
The regulator had also in effect “cast the trustees in the role of insurer to the beneficiaries, which is contrary to principle,” she wrote.
“There is no allegation of dishonesty or an intentional or reckless failure to exercise the required degree of care, skill and diligence,” Justice Jagot wrote.
Mr Kelaher’s attorney Matthew Lees from Arnold Bloch Leibler said ARPA’s claims “had been tested over the course of a three week trial and decisively rejected by the court.
“The court held that none of APRA’s claims of contraventions of superannuation legislation were sustainable and there was no foundation for the disqualification orders sought by APRA,” Mr Lees said.
Mr Venardos said he welcomed the ruling, which his legal team was still reviewing.
His lawyer, Tim L’Estrange of Jones Day, said the decision was “consistent with the view that directors have an oversight role and can in appropriate circumstances continue to rely on the information and advice provided to them by management”.
APRA said it was reviewing the judgment and would respond in detail shortly.
IOOF said it too was reviewing the judgment.
At 1410 AEST, IOOF shares were up 7.93 per cent to $5.99, their highest level since May.