The authority is seeking to impose additional licence conditions and issue directions to APRA-regulated entities in the IOOF group.
The proceedings in the Federal Court seek to disqualify five individuals that were responsible persons at IOOF Investment Management Limited (IIML) and Questor Financial Services.
The proceedings are also seeking a court declaration that IIML and Questor breached the SIS act.
The individuals involved in the proceedings are managing director Chris Kelaher, chairperson George Venardos, chief financial officer David Coulter, general manager – legal, risk and compliance and company secretary Paul Vine, and general counsel Gary Riordan.
APRA alleges that IIML, Questor and the named individuals did not appropriately acknowledge and address conflicts of interest issues raised by APRA from 2015 to date.
APRA has identified on three occasions in 2015, Questor and IIML contravened the SIS Act by deciding to differentially compensate super beneficiaries and other non-super investors for loses caused by the groups.
APRA alleges super beneficiaries were instead compensated from their own reserve funds rather than the trustees’ own funds or third-party compensation.
If successful, the disqualification proceedings would prohibit the above individuals from being or acting as a responsible person of a trustee of a superannuation entity.
APRA has issued a show cause notice setting out its intention to direct IOOF Investment Management Limited to comply with its licence and impose additional conditions on the licenses of the group.
The proposed conditions and directions to comply with conditions seek to achieve significant changes to the identification and management of conflicts of interest by the groups.
APRA deputy chair Helen Rowell said APRA had sought to resolve its concerns with IOOF for a few years but considered it was now necessary to take stronger action against the company.
“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,” Mrs Rowell said.
Ms Rowell said the court action was aimed at achieving enduring change at IOOF to ensure its trustees fully meet their obligations.
“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.”
