The Australian Prudential Regulation Authority (APRA) has advised that it will not appeal the Federal Court decision to dismiss APRA’s court action against IOOF entities, directors and executives.
The case examined a range of legal questions relating to superannuation law and regulation that had not previously been tested in court, relating to the management of conflicts of interest, the appropriate use of superannuation fund reserves and the need to put members’ interests above any competing priorities.
APRA had initiated the action last December due to its view that IOOF entities, directors and executives had failed to act in the best interests of their superannuation members. Before taking the court action, APRA had sought to resolve concerns with IOOF over several years but considered that it was necessary to take stronger action – through use of directions, conditions and court action – after concluding the company was not making adequate progress, or likely to do so in an acceptable period of time.
After receiving the judgment on 20 September, APRA reviewed the reasons for the decision and concluded that it will not appeal the matter.
APRA Deputy Chair Helen Rowell said the judgment nevertheless raised some issues of wider importance for APRA in its supervision of superannuation trustees. APRA is considering any further action that may need to be taken in relation to these, such as revising its prudential standards or seeking legislative amendments, to ensure that member interests are protected to the maximum extent possible.
APRA notes that, notwithstanding the decision not to appeal the judgment, additional licence conditions that APRA imposed on IOOF in December remain in force and APRA’s strengthened supervision focus on ensuring that IOOF implements the changes needed to comply with these conditions continues.