Tag: IOOF

ASIC Imposes Additional Licence Conditions on IOOF

ASIC has imposed additional licence conditions on the Australian financial services (AFS) licence of IOOF Investment Services Ltd (IISL) as part of an application by IISL to vary its licence.

IISL sought a variation to its licence to facilitate the transfer of managed investment scheme, investor directed portfolio services (IDPS) and advice activities from IOOF Investment Management Ltd (IIML) to IISL. The transfer is part of a reorganisation of the broader corporate group (IOOF Group).

In granting the licence variation, ASIC has decided to impose additional conditions relating to the governance, structure and compliance arrangements of IISL.

ASIC’s decision to impose additional licence conditions took into account concerns highlighted by the Financial Services Royal Commission about the real and continuing possibility of conflicts of interests in IOOF Group’s business structure, ASIC’s past supervisory experience of these entities and material supplied by IISL as part of its licence variation application. IISL agreed to the imposition of the additional licence conditions.

In summary, the additional conditions specifically cover:

  • governance – by requiring that IISL has a majority of independent directors with a breadth of skills and background relevant to the operation of managed investment schemes and IDPS platforms;
  • the establishment of an Office of the Responsible Entity (ORE) – that is adequately resourced and reports directly to the IISL board, with responsibility for:
    • oversight of IISL’s compliance with its AFS licence obligations;
    • ensuring IISL’s managed investment schemes are operated in the best interests of their members; and
    • overseeing the quality and pricing of services provided to IISL by all service providers (including related companies),
  • the appointment of an independent expert, approved by ASIC, to report on their assessment of the implementation of the additional licence conditions.

ASIC Commissioner Danielle Press said, ‘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 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.’

IOOF to acquire National Australia Trustees Limited

National Australia Bank Limited will divest National Australia Trustees Limited (NATL) to IOOF Holdings Limited (IOOF). This continues the retreat by the big banks from services which once were seen as customer relationship building but now are being sidelined by the evolution of online distribution, and the quest to boost their capital levels. This is leading to a focus on “core banking”.

According to Bloomberg, National Australia Trustees Limited operates as a statutory trustee company. The company acts as trustee, manager, executor, and agent, as well as engages in other associated activities. Its services include estate planning, estate administration, compensation trust, corporate trust, and personal asset management services.

IOOF’s trustee business, Australian Executor Trustees (AET), is one of Australia’s largest and most experienced specialist providers of estate and trustee services. National Australia Trustees is a significant provider of trustee services with a recognised history in Western Australia, New South Wales, Queensland and Victoria.

IOOF Managing Director, Christopher Kelaher, commented, “National Australia Trustees’ offering is a strong strategic fit with our existing trustee business. This acquisition demonstrates our commitment and belief that all Australians should have access to professional trustee services as part of their wealth planning to support their financial independence and provide them with peace of mind.”

“IOOF’s AET business is a leading trustee operator and this agreement will lead to improved outcomes for our combined customers who will benefit from greater scale and more specialist product offerings.”

National Australia Trustees CEO, Andrew Rimmer, said, “This is the right outcome for our customers and follows a strategic review by NAB of the NATL business.”

The acquisition of NATL means IOOF will become one of Australia’s largest compensation trust providers and this will further enhance both IOOF and AET’s national presence in offering specialist trustee services.

Completion of the sale is subject to regulatory approval and is expected to be finalised in the next few months.

Mr Rimmer said that, “During this period, National Australia Trustees will be working closely with IOOF to ensure the successful transition of staff, systems and customers.”Mr Kelaher added, “Both IOOF and NATL are committed to client service excellence and look forward to working together to ensure a smooth transition and continuation of superior client service.”