Australian regulator loses court battle against wealth manager IOOF

SYDNEY (Reuters) – Australia’s banking watchdog lost a key case against IOOF after a court ruled the wealth manager did not breach pension industry laws, marking a second setback in as many months for financial regulators looking to clamp down on misconduct in the country.

The Australian Prudential Regulation Authority (APRA) has failed to demonstrate that top IOOF Holdings officials breached pension laws, Federal Court judge Jayne Jagot said on Friday. APRA had alleged that IOOF misused pension fund money.

Just last month, the court ruled against the Australian Securities and Investments Commission, dismissing the corporate watchdog’s allegations that Westpac Banking Corp had approved mortgages without adequate credit checks.

The back-to-back losses come even as Australia pushes for stricter oversight of the financial sector after a public inquiry last year found widespread wrongdoing and lackluster enforcement by feeble regulators.

On Friday, Jagot also declined to disqualify the IOOF directors, as requested by APRA, and ordered the regulator to pay for legal costs of the firm.

“For a number of reasons, I have found APRA’s approach unpersuasive,” she said. “In the present case, the underlying facts have not been proved.”

An APRA spokesman said the regulator was reviewing the judgment and would issue a response “shortly”.

IOOF shares jumped as much as 8.1% to A$6 ($4.07) following the news, their highest since early May.

In an unprecedented move in December, APRA had sought to disqualify five IOOF executives through a court order for failing to act in their customers’ interests.

It alleged that IOOF used money belonging to pension fund customers to compensate them for losses caused by the company and said it had been working with the firm to resolve concerns about unaddressed conflicts of interest since 2015.

It resulted in IOOF’s Managing Director Christopher Kelaher and Chairman George Venardos stepping aside to fight the APRA’s move.

“The inescapable fact is that APRA’s case fails at each step on the question of proof. It is not possible to conclude that in acting as he did Mr Kelaher contravened any of his director’s covenants,” Jagot said.

Reporting by Paulina Duran, Byron Kaye and Nikhil Kurian Nainan; Editing by Muralikumar Anantharaman and Himani Sarkar

Filed in: Top News Tags: 

You might like:

Column: Spend or hoard? Fate of forced savings could define pandemic recovery – Mike Dolan Column: Spend or hoard? Fate of forced savings could define pandemic recovery – Mike Dolan
Column: What COVID-19 is teaching us about how to reform Medicare Column: What COVID-19 is teaching us about how to reform Medicare
Ackman says hedge fund up 27% year to date, dumped Berkshire Ackman says hedge fund up 27% year to date, dumped Berkshire
Ackman says portfolio is up as much as 27%, sold Berkshire recently Ackman says portfolio is up as much as 27%, sold Berkshire recently
Starboard set to win eight board seats at GCP Applied Technologies-sources Starboard set to win eight board seats at GCP Applied Technologies-sources
Northern Trust shutting fund; an outlier or sign of future risk? Northern Trust shutting fund; an outlier or sign of future risk?
Retirement services provider Human Interest extends funding round to $50 million Retirement services provider Human Interest extends funding round to $50 million
Northern Trust shutting fund in latest prime money market stress Northern Trust shutting fund in latest prime money market stress
© 2020 Stock Investors News. All rights reserved. XHTML / CSS Valid.