IOOF will fork out a whopping $235.3 million to compensate customers for bad advice and charging fees for no service rendered.
The ASX-listed firm's June 2019 financial results were overshadowed by its client remediation bill that is expected to hit $392 million (includes other related costs).
This is further split into former ANZ aligned dealer groups ($168.8m) and IOOF representatives ($223.2m). About $12.1 million of product remediation has been paid out.
The external advice review found incidences of fees for no service, inadequate documentation and inappropriate advice.
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IOOF said it used a sample of financial advisers based on key risk indicators to establish possible incidents of inappropriate advice or instances of fees for no service (or no evidence of service).
"Where client compensation is probable and able to be reliably estimated, provisions have been taken. Compensation costs include return of service fees, estimated client loss for inappropriate advice, interest for time value of money at ASIC's directed rate of RBA cash rate + 6% and committed costs to resource the compensation program," IOOF said.
Chief executive Renato Mota said aligned dealer group remediation costs are largely longstanding historic structural issues identified in the current year.
However, as an advice-led business offering choice to clients, "we believe we are well positioned to take advantage of market opportunities as industry disruption continues, the banks exit the industry, and as client and adviser needs evolve," he said.
The integration of former ANZ licensees has completed, Mota said, but the process of acquiring ANZ's pension and investments arm continues.
Mota also announced today that Melissa Walls has been hired as the group's new chief people officer to help accelerate the cultural change process.
Statutory NPAT of $28.6 million was down 67.7% year on year, which includes the provision for financial advice remediation.
Total funds under management, administration and advice (FUMA) stood at $149.5 billion, up 18.7% year on year.
The group declared a final dividend of 12 cents per share and a special dividend of 7 cents per share.