IOOF has announced significant new platform arrangements, terminating its existing relationship with BT.
Announcing the move to the Australian Securities Exchange, IOOF chief executive, Renato Mota said that IOOF had embarked on its own platform simplification strategy, aligning with providers who fit within its open architecture approach.
He said the agreement with BT included termination rights for both parties on 12 months’ notice and provided IOOF with rights in respect of the unwinding of the current arrangements and the transition of clients and funds to other providers.
It was estimated that the cost of such a transition from BT would cost IOOF between $30 million and $70 million and when combined with anticipated customer attrition made such a strategy unattractive.
The announcement said IOOF would receive a one-off settlement of $80 million pre-tax which took into consideration amounts owed in recognition of IOOF’s rights under the agreement.
Mota said that consistent with IOOF’s open architecture approach and platform strategy, IOOF was entering into an agreement with HUB24 and that HUB24 would act as the platform administration and custody provider.
Comments
So much for all the bleating by IOOF group advisers that "We have an open APL. We don't even use IOOF platforms, we use BT". Clearly this was tolerated because IOOF was getting a kickback from BT. Soon they'll be getting kickbacks from Hub24 instead, and IOOF group advisers will be "encouraged" to switch their clients across.
IOOF platforms are way expensive, they'll need to something there to meet the market.
A few dealer groups had third party pricing arrangements with IOOF where BT was the administrator. As far as I’m aware they are all wound up, or will be come 1 Jan. I think it’s a good thing, why should my client walk their portfolio down the road and get a fee saving because I don’t have $10bn on a specific platform? I know a few providers are still doing deals but it needs to stop.
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