IOOF has said it has no plans to investigate potential client losses after dropping more than 30 planners last year, saying that those clients are now the responsibility of the adviser.
ifa reported last month that IOOF had cut ties with 33 out of 48 planners licensed under My Adviser because they did not meet certain requirements. The other 15 advisers who passed the due diligence procedure were moved under the Consultum licence.
During a Senate hearing in Sydney yesterday – chaired by Labor Senator Sam Dastyari and joined by Liberal Senator Sean Edwards, Nationals Senator John Williams and Liberal Senator David Bushby – the committee asked IOOF whether it had looked to see if those planners gave poor advice.
"If [the advisers] are being cut free for not living up to the culture or the quality of your company, and they gave bad financial advice and clients lost money, are you looking through those books or files of those that have been shoved off to consider compensation?" asked Senator Williams.
IOOF company secretary Danielle Corcoran – who fronted the committee along with IOOF chairmen Roger Sexton and head of investigations Rob Urwin – answered by saying that those clients are not her company's responsibility.
"The clients are the clients of the adviser. So we no longer have the adviser and the clients transfer with the adviser," she said.
"They're authorised reps so they are on our licence but not subject to employment law. And we have standards and if they don't meet our standards then we no longer want them associated with our business."
Yesterday's hearing follows allegations of front-running and insider trading at IOOF sparked by Fairfax Media news reports.
Last month, the committee grilled IOOF managing director Chris Kelaher, who said there was no systemic failure at the $2.6 billion financial services giant that required it to inform ASIC.
Mr Kelaher said a PwC inquiry earlier this year found no evidence of front-running detected. However, that report showed the investigation was narrow in scope and PwC has assumed no responsibility for the accuracy or completeness of the information in the report.
Yesterday, Mr Sexton said a majority of the alleged compliance breaches reported in the media occurred at Australian Wealth Management (AWM) before IOOF became owner of the company.
He also said he would be taking action for defamation by the media.
"I am extremely concerned about the misreportings that has occurred in the press, that is involving IOOF. I got three separate calls from journalists, I had given them an answer and they printed the exact opposite in the press. That's outrageous," he said.
"Who loses money in this situation are the small mum and dad investors."
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