IOOF faces looming class action

IOOFis facing potentially damaging legal action from aggrieved investors who lost money in traded policies withAM Corporation(AM Corp).

Money Managementreceived a copy of correspondence sent to numerous financial planners offering to commence class litigation against AM Securities on behalf of clients.

The correspondence was a request by retired financial planner and former chair of AustWide Unitholders Action Group, Alan Kernahan, who “has been requested by advisers to facilitate a representative action against AM Securities for losses allegedly incurred by investors in traded policies”.

The policies, it is understood, relate to investments with AM Corp’s LifeTrack investment and superannuation platform.

IOOF managing director Rob Turner, acknowledges that some investors are aggrieved but says it’s more an issue for AM Corp’s previous owners.

“We only took on AM Corp at the end of March so this goes back before our time. They’re probably taking action against the previous owners I would have thought,” Turner says.

“We’re listening to what the people are saying but at the end of the day, we’re just the new trustee here. It’s an issue relating to a prior business so we’re really looking to see what the situation is at the moment.”

Turner says the policies may not have provided investors with exceptional returns over the past two years, but this is largely due to underperforming equity markets. He says there has been a recent upswing in performance.

“A number of investors have felt a little aggrieved by the performance but the fund has increased in value by 12 per cent over the last month,” he says.

“Some people withdrew their money when their investments went down in value but other investments have gone down a lot more than what the traded policies have.”

However, at this stage it is unclear whether the grievances are strictly related to fund performance.

“This is just a small fund, we’ve got $12 billion in funds under management, this is less than $100 million. So you’ve got to put it into perspective,” Turner says.