Assistant Treasurer Josh Frydenberg has said the corporate regulator is in the midst of an investigation into allegations of improper practices within IOOF, as senators from both sides of politics renew their calls for a royal commission.
"The media reports over the weekend regarding IOOF contain serious allegations of misconduct. I am aware that ASIC is investigating this matter," Mr Frydenberg told ifa yesterday.
ASIC has confirmed that it is investigating IOOF and noted that "licensees have an obligation to report significant
breaches and market participants have an obligation to report information which may raise a warning signal of market misconduct".
Despite the "seriousness" of the allegations, Mr Frydenberg would not be drawn on the potential for a royal commission, saying that "it was not appropriate to comment further while investigations were underway".
Nationals Senator John Williams said the claims about IOOF "put more weight" behind the need for a royal commission into the financial services industry.
"It's very concerning to hear what is going on – accusations of insider trading and cheating exams. My biggest concern is these products that they are out there selling, are they up to standard?" he asked.
The failure of the corporate watchdog combined with an industry not prepared to change its culture was behind the IOOF misconduct scandal, according to Labor Senator Sam Dastyari.
"Frankly, if the regulator did what it was supposed to do, a royal commission would not be needed," he told ifa.
"The combination of failed regulation and a failure of the industry to change its culture has led to these calls, and we have a government that has remained conspicuously silent despite these repeated shortcomings. Hopefully this time will be different, but I have learned not to hold my breath."
Mr Frydenberg responded and said he would be making no comments while the ASIC investigation was taking place.
"I suggest that Senator Dastyari take this into account and do the same," he said.
Yesterday, IOOF shares plunged by 15 per cent, although Morningstar said it still had faith in the financial services company.
"At this stage, we make no changes to any key data points and after the sharp sell-off, believe IOOF is undervalued," the research house said.
"As long as IOOF maintains a strong compliance track record and takes appropriate remedial action when necessary, this should not have a material impact on the business."
IOOF has so far rebuffed claims that it had failed to notify the regulator of any misconduct.
"All the issues raised, historic or recent, have been dealt with appropriately at the time. This includes, where relevant, through internal and board review, notifying industry regulators, ongoing review of compliance measures and controls, employee education and independent investigations," an IOOF spokesperson said.
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