Australian Ethical is in the process of divesting its holding in financial services business IOOF. The decision was made following an internal review which assessed IOOF against the Australian Ethical Charter. The divestment will be made in line with a prudent investment management process and the interests of Australian Ethical’s customers.

Why Australian Ethical is divesting from IOOF

We have assessed that IOOF has been slow to implement changes to address serious APRA concerns, including demonstrating to APRA that they have a robust conflicts management framework (an issue raised by the regulator over several years). APRA has imposed licence conditions on IOOF and commenced proceedings in December 2018 to disqualify the CEO, Chair and other officers of IOOF from acting as a director of a superannuation trustee.

We have carefully reviewed the information presented as part of APRA’s legal proceedings against IOOF as well as information provided by IOOF in response. We have also reviewed the evidence presented before the Banking Royal Commission in August 2018.

How does this compare with last year’s AMP divestment?

The decision to divest from IOOF follows our decision in May 2018 to divest from AMP due to wrongdoing scrutinised during the Royal Commission in April 2018. Whereas our decision to divest from AMP was based on unrefuted facts aired during the Royal Commission, IOOF has disputed some key facts about its actions. As a result, we decided to wait until the Royal Commission’s final report before making a decision about whether to divest from IOOF.

However, APRA’s legal action in December 2018 prompted us to review the regulator’s published information in support of the action as well as IOOF’s response. Taking all of this into account, we reached the conclusion that we should divest from IOOF on ethical grounds.