Advice remediation has taken a toll on IOOF Limited with the company reporting a 67.7 per cent decline in statutory net profit after tax for the full year, albeit that it could point to a 3.4 per cent increase in underlying net profit after tax of $198 million.
IOOF chief executive, Renato Mota described the result as having been achieved “in one of the most challenging years for our company and for the industry”.
In doing so, he said that total funds under management, administrative and advice (FUMA) had increased by 19 per cent to $149.5 billion as at 30 June, with a $16.1 billion contribution form ex ANZ Advice licensees.
As well, he pointed out that the company had met all its license conditions as required by the Australian Prudential Regulation Authority with respect to the IOOF superannuation businesses.
Despite the profit decline, the board declared a total fully franked dividend of 19 cents per share.
Dealing with advice, Mota said that the company had conducted a comprehensive review of advice to clients with the review including a sampling of advisers and an external review of over 1,200 files.
He said the review found incidences of fees for no service, inadequate documentation and inappropriate advice and that in response IOOF had provisioned for $182.7 million in remediation costs, inclusive of interest as well as $40.4 million in program costs.
Commenting on the outlook, Mota said the industry was in a state of flux and was working towards restoring trust – something which took time and hard choices.
“We see significant market opportunity in being advice-led,” he said. “There is increasing need and demand for quality financial advice; particularly in the context of increasing per capita wealth, an ageing population in Australia and having one of the world’s largest retirement income systems.”