The financial regulator has ordered wealth manager IOOF to make sure a majority of directors have appropriate skills and experience to support its investment operations or risk losing its financial licence.
The Australian Securities and Investments Commission has imposed additional licence conditions on the IOOF that include the appointment of vetted independent directors, increased internal monitoring, and reporting by an ASIC-approved independent expert to ensure compliance with the additional conditions.
The changes come amid a restructure at IOOF following last year’s financial services royal commission hearings, which heard the prudential regulator had repeatedly raised concerns about the wealth manager’s set up and potential conflicts of interest.
The Australian Prudential Regulation Authority last month lost its Federal Court case to disqualify five former IOOF directors for failing to act in the best interest of superannuation members.
“ASIC is serious about improving the quality of governance and conflicts management across the funds management sector and ensuring that investors’ best interests are the highest priority of fund managers,” ASIC commissioner Danielle Press said.
“ASIC will use its licensing power, including through the imposition of tailored licence conditions to address governance weaknesses, the risk of poor conduct or vulnerabilities to conflicts of interest in a licensee’s business model.”
ASIC now requires IOOF’s investment services to have a majority of independent directors “with a breadth of skills and background relevant to the operation”.