ASIC weighs legal action against IOOF over fees for no service

ASIC is investigating whether to take legal action against IOOF for charging advice fees where services were not provided.

IOOF chief executive Renato Mota Picture: Aaron Francis

IOOF is in the corporate regulator’s sights as it investigates whether to take legal action against the wealth group for charging advice fees where services were not provided.

The Australian understands a host of IOOF documents, data and files have been requisitioned by the Australian Securities & Investments Commission as it assesses the merits of a legal case.

The probe is said to be in the early stages and there is no certainty legal action will eventuate.

The fee for no service scandal — which engulfed a number of banks and wealth players — has already seen ASIC lodge legal action against National Australia Bank last year. Potential legal cases across different regulators are ramping up after last year’s Hayne royal commission made referrals to ASIC and the banking regulator.

ASIC can issue compulsory notices to produce documents under the ASIC Act, the powers cover surveillance and investigations of suspected breaches of the law.

An ASIC spokeswoman declined to comment on any IOOF inquiries. An IOOF spokeswoman said: “We have regular and recurring interactions with regulators in the normal course of business, including ASIC. It would be inappropriate to comment on specifics of our interactions.”

At IOOF’s annual general meeting last month chairman Allan Griffiths told shareholders the group was taking “positive steps” to improve relationships with stakeholders including regulators. Chief executive Renato Mota told investors he was making changes in areas including removing and avoiding conflicts, product design, culture and pay and advice quality.

Mr Mota also said following an external review into instances of inappropriate advice, fees for no service and poor documentation, the company had an estimated exposure of $223m.

Last month, NAB is believed to have admitted to the Federal Court it engaged in misleading and deceptive conduct when it charged superannuation customers fees for services it never provided. That came as the corporate regulator filed a statement of agreed facts and admissions with the court in its case against NAB. The matter is slated to return to court in March.

In documents filed with the Federal Court last year, ASIC alleged that NAB super trustees NULIS and MLC Nominees misled members of MLC MasterKey Super products.

It also alleged the NAB units deducted $33m in plan service fees from 220,000 members of MLC MasterKey Business and MLC MasterKey Personal Super who did not have a plan adviser. NAB also deducted about $67m plan service fees from 300,000 members of MLC MasterKey Personal Super where advisers were not required to provide services and members did not receive services, ASIC alleged.

The regulators have been stepping up legal actions after they were criticised at the royal commission for a soft approach to enforcement. IOOF was, though, successful in a legal battle that came to a head in September when the Federal Court found the company and five representatives did not contravene the Superannuation Industry Supervision Act.

The prudential regulator earlier this week slapped licence conditions on a unit of the CBA, marking the first time it has hit a bank for charging dead people fees. The conditions were imposed on Avanteos for charging service fees to 2234 dead members’ accounts.