Newspaper icon
The latest issue of Financial Standard now available as an e-newspaper
READ NOW
IOOF increases FUMA, lifts remediation costs

IOOF has recorded an increase in funds under management, advice and administration of 3.4% to $202.3 billion while also increasing remediation provisions by $80 million.

The wealth manager is expecting an underlying profit from continuing operations of $123 million to $125 million. The result has been impacted by the volatility in financial markets relating to the impacts of the pandemic.

IOOF chief executive Renato Mota said: "The recent recovery in equity markets has been the major contributor to the $6.7 billion uplift in FUMA and pleasingly, we have continued to attract strong flows into our platforms. That said, the impacts of the COVID-19 pandemic are continuing."

However, the total advice remediation provision relating to the ex-ANZ advice licensees is expected to increase by approximately $80 million. This is to be offset by a corresponding increase in an equivalent receivable from ANZ.

The company said in its quarterly results the increase is expected to fall within the financial cap of the remediation program arrangements with ANZ.

"The increased provision is a consequence of a change in methodology relating to adviser categorisation, which now aligns to that used by IOOF," IOOF said.

For the June quarter, IOOF recorded net outflows of $93 million in financial advice, a stark decrease from the previous corresponding period that recorded outflows of $853 million.

The recorded outflows for the quarter are a result of off-boarding two advice practices from ex-ANZ advice licensees, resulting in $155 million in outflows.

In addition, there were 12 sub-scale single adviser practices off-boarded which had $115 million in funds under advice. These were offset by a number of practices joining the group.

Early release of superannuation requests impacted net flows, having paid 99,174 requests totalling approximately $743 million.

Mota said the COVID-19 environment sparked client concern and uncertainty around macro-economic conditions.

"Our advisers are seeing first-hand client concern and uncertainty around macro-economic conditions. This client sentiment is particularly apparent through withdrawals associated with the Early Release of Superannuation scheme (ERS) and subdued flows in financial advice," he said.

"Providing the community with guidance and support is at the core of IOOF. In the face of economic uncertainty and financial stress the value and importance of financial advice, for all Australians, has never been more evident."

Read more: IOOFRenato Mota
Link to something qJyhapmU