IOOF managing director Chris Kelaher said the company did not report allegations of misconduct to the regulator because there was no evidence of it detected in a PwC inquiry and further, there was no systemic failure within the company.
Addressing a senate hearing in Sydney yesterday – chaired by Labor Senator Sam Dastyari and joined by Liberal Senator Sean Edwards and Nationals Senator John Williams – Mr Kelaher reiterated there was no systemic failure at the $2.6 billion financial services giant that required it to inform ASIC.
"I am confident that I can confirm for you and the broader community that the company has an extremely strong compliance culture and claims of widespread wrongdoing have no basis in fact," Mr Kelaher said.
"The issues raised were historic and have all been identified internally and are certainly not indicative of any systemic failure."
Yesterday's hearing follows allegations of front-running and insider trading at IOOF sparked by Fairfax Media news reports.
Mr Kelaher said the PwC report's findings last year were "nil" and "there was no evidence of front-running detected".
ASIC commissioner Greg Tanzer, who was also questioned at yesterday's hearing, provided a defence for IOOF. He said while companies are strongly encouraged to report suspicions of misconduct to ASIC, it is not always considered a breach if they do not
"It depends on particular circumstances," Mr Tanzer said.
The senators, however, raised concerns about how involved Mr Kelaher was during PwC's investigation.
When questioned by Senator Dastyari, Mr Kelaher admitted he could not remember when he was first told about front-running allegations.
"I'm just saying I can't recall specifically," he said. "I'd have to check my recollection, but I take the matter seriously."
Despite this, Mr Kelaher has now agreed to turn over the report by PwC to the committee.
Senator Dastyari suggested the committee call upon PwC officials to talk about the findings.
"It's hard for me to have faith in a report being produced on the basis of claims by a whistleblower and the whistleblower hasn't even been spoken to in the production of the report," Senator Dastyari said.
"The whole thing reeks of a whitewash."
IOOF recently engaged PwC again to carry out another independent review of its operations amid claims of misconduct by some of IOOF's staff and to review the breach reporting procedures within its research division.
The senate committee also informed Mr Kelaher that it had received a 29-page transcript of a recorded conversation between the whistleblower and IOOF head of investigations Rob Urwin.
Senator Dastyari said to describe the conversation as "explosive" would be an understatement.
"It really does call into question your culture, your firm, how it conducts business and how it deals with whistleblowers. That would certainly be a matter for another day," he said.
Yesterday's hearing is just the beginning of a "lengthy process" with several more hearings to come, Senator Dastyari said.
IOOF head of advice research Peter Hilton, the man at the centre of some the key allegations, was unable to attend yesterday's hearing for "good reason", but will be expected to appear at another hearing at a later date.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 24 Jan 2019Former Dover and Synchron adviser banned for five yearsBy Eliot Hastie
- 24 Jan 2019Very few Australians save and even fewer invest their moneyBy Reporter
- 24 Jan 2019Advisers undercharging clients for efforts, says CEOBy Adrian Flores
- 23 Jan 2019Adelaide adviser permanently banned from industryBy Eliot Hastie
- 23 Jan 2019Bowen slams ‘woeful’ handling of royal commissionBy James Mitchell
- 23 Jan 2019Gender super gap lower but still at 34%By Adrian Flores
- view all