IOOF sets money aside
IOOF has set aside $235 million to cover the cost of customer refunds after a review of its advice uncovered instances of fees for no service, inadequate documentation and inappropriate advice.
The firm’s full-year profit fell by two thirds to $28.6 million after an external review of more than 1200 files and a sampling of advisers led IOOF to set aside $182.7 million in remediation and interest plus $40.4 million for program costs.
IOOF also expensed $12.1 million in product remediation, up from the $10 million estimated at the time of February’s half-year results.
Chief executive Renato Mota, who took permanent charge in June after initially replacing Christopher Kelaher in December on an interim basis, said he had been focused on stabilising IOOF.
“We are holding ourselves to the highest standards and where there is uncertainty or ambiguity we will remediate in favour of the client,” Mr Mota said. Chief executive Renato Mota is focused on stabilising IOOF
IOOF cut its fully franked final dividend by 8.0 cents to 19 cents due to the remediation costs, but softened the blow with a 7.0 special dividend “to reflect the economic performance of the business”.
Underlying profit, which strips out the remediation costs, edged up 3.4 per cent to $198.0 million as revenue for the 12 months to June 30 rose 40.3 per cent to $1.06 billion on an influx of ANZ advisers.
IOOF said it would consider further capital management initiatives, including buybacks, and additional special dividends once it has completed the purchase of ANZ’s OnePath Pensions and Investment life insurance business.
IOOF shares fell as much as 11.4 per cent yesterday before recovering some of their losses to close 6.92 per cent down at $4.84.
AN EXTERNAL REVIEW OF MORE THAN 1200 FILES AND A SAMPLING OF ADVISERS LED IOOF TO SET ASIDE $182.7 MILLION IN REMEDIATION AND INTEREST PLUS $40.4 MILLION FOR PROGRAM COSTS