Banking royal commission: ANZ’s OnePath sale to scandal-hit IOOF under cloud

ANZ’s $1 billion sale of its OnePath superannuation business to wealth manager IOOF has come under a cloud.

OnePath chair Victoria Weekes leaves the Federal Court in Melbourne yesterday. Picture: AFP

Whether ANZ’s $1 billion sale of its OnePath superannuation business to wealth manager IOOF could be in the best interests of members of the super fund has fallen under considerable doubt, after the royal commission probed the appropriateness of the transaction.

Appearing at the royal commission yesterday, OnePath custodian chairman Victoria Weekes revealed the trustee was still yet to meet with the board of IOOF to satisfy whether the deal would be in the best interests of members, and may never meet with the scandal-ridden company.

Mr Weeks did admit, however, that OnePath was currently considering the testimony of IOOF chief executive Chris Kelaher and IOOF distribution manager Mark Oliver last Friday.

In an explosive set of proceedings, the royal commission last week heard IOOF had a practice of using superannuation members’ savings to fund compensation for its own multimillion-dollar mistakes, that the $3bn company had a torrid relationship with the prudential regulator and repeatedly flouted its concerns, and that board meeting minutes were sometimes taken on partly illegible scraps of paper. Documents tabled at the royal commission show that in 2015 APRA told IOOF it was concerned about the difficulty it had in getting “accurate” information from IOOF, its “overall culture” and “the number and range of prudential matters” at the company, which manages $120bn in retirement savings.

Yesterday, the royal commission was shown ANZ internal meeting minutes outlining that the IOOF deal was “conditional on a number of matters including that IOOF will meet members’ best interest obligations going forward”.

Ms Weekes said ANZ was interested in IOOF’s “view about the business and future” of its members.

Despite this, Ms Weekes admitted that before the deal, the OnePath trustee had never considered whether it was in the best interests of members to continue to charge commissions to its members. The royal commission also heard ANZ continued to receive $11 million in shelf space fees, despite the payments being banned under FoFA reforms. Rather than rebate these fees back to clients, ANZ paid itself back through a spiderweb of related parties, the commission heard.

Documents tabled at the commission yesterday showed the OnePath board had requested a presentation from the IOOF board “in relation to IOOF’s strategic direction and business plan and operations, services and performance to give comfort to the board that members’ best interest obligations will be met going forward”.

“Has the board yet had a presentation from IOOF?” counsel assisting Michael Hodge QC asked. “No, we haven’t,” Ms Weekes replied. She said OnePath originally wanted to meet with the IOOF board in March but it decided to put the meeting off until it believed “the time is right”.

Documents showed OnePath had been considering several media reports, including articles by The Australian, which outlined IOOF’s approach to gouging superannuation members. OnePath’s legal advisers had also prepared a paper identifying the issues raised in those reports.

The royal commission also heard ANZ management believed that the continued payment of commissions was “critical” to gain support from IOOF’s adviser network to secure the $965m takeover, which was announced late last year.

“Would it be possible for the board to approve the successor fund transfer without being satisfied that upon the subsequent sale of OnePath Custodians to IOOF the members’ best interests would be served by remaining within an entity controlled by IOOF?” Mr Hodge asked. Ms Weekes said: “I think the answer is no.”