In a move that has sent waves of relief through the embattled financial planning industry, IOOF’s (ASX: IFL) protracted moves to take over ANZ Bank’s (ASX: ANZ) superannuation business have finally been given regulatory clearance.
The takeover had been under a cloud ever since the Banking Royal Commission, causing concerns for customers and shareholders after extra licence conditions were imposed on IOOF.
The Australian Prudential Regulation Authority (APRA) has now said that IOOF has taken steps to improve governance and ensure members’ interests are looked after, which means IOOF is now fully cleared to acquire ANZ’s OnePath pensions and investments business for $825 million.
Deal is important for both parties
The deal is important in both directions, with ANZ and its fellow big bank cousins all keen to scale back their exposure to wealth management in the wake of the Royal Commission and IOOF looking to cement its position as a growing independent fund manager of scale.
The APRA decision was widely expected but not guaranteed, given that the regulator had taken legal action against IOOF and sought to have some of its directors disqualified – a landmark case that APRA lost in September.
In its latest decision, APRA said it had no reason to think that the change in ownership could cause the trustees of the funds to breach their obligations under the Superannuation Industry (Supervision) Act, which broadly calls for funds to act in the best interests of their clients.
APRA said IOOF has improved its governance
APRA said that since it imposed extra licence conditions on IOOF last year, the wealth manager had appointed a majority of independent directors to the boards that oversee its super funds and had made other changes.
“APRA’s decision recognises IOOF’s progress in strengthening governance structures and management of conflicts within its existing RSE licensees, in response to additional licence conditions imposed by APRA in December 2018,” APRA said.
IOOF has touted the ANZ deal as one that would help it to scale up the size of its core business.