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The managing director and chairman of IOOF Holdings (ASX: IFL) have stepped down from their roles to fight legal action brought by the Australian Prudential Regulation Authority (APRA), in what the finance services provider has described as an "appropriate" step in the interests of governance.
APRA announced on Friday that it was taking legal action to disqualify five IOOF employees from running a superannuation fund, alleging they had not acted in the interests of members.
The prudential regulator began proceedings in the Federal Court to disqualify IOOF managing director Chris Kelaher (pictured), chairman George Venardos, CFO David Coulter, company secretary Paul Vine and general counsel Gary Riordan.
While Kelaher and Venardos have stepped down, the other three employees will remain in their positions but with no management responsibilities for IOOF trustee companies and "no engagement at all" with APRA for the time being.
Renato Mota, IOOF's current group general manager for wealth management, has been appointed acting chief executive officer while non-executive director Allan Griffiths is now acting chairman.
"We maintain our position that the allegations made by APRA are misconceived, and will be vigorously defended," says Griffiths.
"The Board believes that, in the interests of good governance, it is appropriate that Chris and George step aside from their positions. The Board will also commence a search for an additional non-executive Director."
Griffiths acknowledges the seriousness of the allegations, and highlights IOOF's responsibility to superannuation members, shareholders, advisers, employees and the wider community to take "decisive action".
"We are entirely focused on addressing the governance issues in the interests of all stakeholders and will do so in an orderly manner," he says.
"I will personally lead our review of the situation and, alongside Acting CEO Renato Mota, will work cooperatively with APRA to continue to implement previously agreed initiatives. Many of these actions are already complete."
In October, IOOF had entered an agreement with ANZ (ASX: ANZ) to acquire its OnePath Pensions and Investments business for $975 million, but that is now under reconsideration.
"Given the significance of APRA's action, we will assess the various options available to us while we seek urgent information from both IOOF and APRA," says ANZ deputy CEO Alexis George.
"The work to separate Pensions and Investments from our Life Insurance business continues. There is a framework available to complete the Zurich transaction that does not involve IOOF."
IOOF shares have fallen by almost 40 per cent since APRA's announcement and are currently trading at $4.30 at 11:36am AEDT.
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