IOOF managing director and chairman to step aside pending APRA action

IOOF shares continued to sink, after its managing director and chairman stood aside to fight APRA moves to disqualify them.

IOOF managing director Christopher Kelaher leaves banking royal commission hearings after giving evidence in August. Pic: AAP

IOOF managing director Chris Kelaher and chairman George Venardos will take leave from their roles while they fight legal action brought by the prudential regulator to boot them out of the super industry.

The move, effective immediately, follows a shareholder revolt sparked by a 35 per cent plunge in IOOF’s share price on Friday after the announcement of the Australian Prudential Regulation Authority’s legal action to disqualify Mr Kelaher, Mr Venardos and other company executives.

IOOF said the other executives alleged by APRA as not fit and proper people to run a super fund - chief financial officer David Coulter, company secretary Paul Vine and general counsel Gary Riordan - would remain in their jobs but will have no involvement with IOOF’s super trustee companies and no contact with APRA while the legal action is on foot.

IOOF’s head of wealth, Renato Mota, has been appointed acting CEO and non executive director Allan Griffiths will act as chairman.

The move failed to halt the sell off of IOOF shares, which fell 35.8 percent on Friday and were 7.8 per cent lower again at noon (AEDT) today.

Today’s move follows a public call on Friday from IOOF’s biggest shareholder, Martin Currie, for a clean out of board and management at the stricken wealth manager.

Amid intensifying pressure on IOOF, Mr Griffiths today maintained the company’s position that APRA’s action was “misconceived” and would be “vigorously defended”.

However he added: “The board believes that, in the interests of good governance, it is appropriate that Chris and George step aside from their positions.”

IOOF will also look for an additional non-executive director.

APRA argues that IOOF has failed on many counts to meet deadlines the regulator set for it to improve its systems and management of conflicts of interest.

APRA also wants to impose sweeping new licence conditions on the company.

Friday’s Federal Court statement outlines concerns with IOOF’s conflicted structure, where companies were both trustees of super funds that were responsible for looking after the interests of members and, at the same time, earned revenue by running investment funds.

IOOF chairman George Venardos has stepped aside.

IOOF’s Mr Griffiths said today: “We acknowledge the seriousness of these allegations. We have a responsibility to our superannuation members, shareholders, advisers, employees and the wider community, to take decisive action.

“We are entirely focused on addressing the governance issues in the interests of all stakeholders and will do so in an orderly manner.

“I will personally lead our review of the situation and, alongside acting CEO Renato Mota, will work cooperatively with APRA to continue to implement previously agreed initiatives. Many of these actions are already complete.”

APRA’s move could threaten to derail IOOF’s $975 million purchase of ANZ’s financial planning businesses.

IOOF in October 2017 agreed to buy ANZ’s Australian superannuation business and some financial planning operations for $975 million, but ANZ said Friday it was urgently seeking clarification over APRA’s intervention.