IOOF yet to start paying back customers

Rebecca Gredley
Wealth manager IOOF is yet to start repaying customers $223 million for incorrect advice

A wealth management company savaged in the banking royal commission is yet to start refunding customers an estimated $223 million for either providing inappropriate advice or making them pay for nothing.

IOOF's chief executive Renato Mota - who has been in the role since June - has fronted a parliamentary hearing on Thursday to explain how the company is meeting recommendations from last year's probe into the financial sector.

The royal commission found IOOF had been charging customers fees for no service, while concerns had been raised about the wealth manager's set up and potential conflicts of interest.

The company has undergone tremendous change since then, Mr Mota said, apologising to customers who had been let down.

Mr Mota said the $223 million figure was an estimate, which was evenly split between providing inappropriate advice and fees for no service.

It has set aside $235 million for the remediation.

"We have not commenced the remediation because we're still working through that analysis," he said.

It hasn't been six months since the review started, he added.

Mr Mota couldn't pinpoint how many cases were involved, promising to let parliament know at a later date.

IOOF reported a two-thirds drop in annual profits in August and Mr Mota said its reputation had suffered since the royal commission.

The company now has client service agreements between financial advisors and clients, which set out what will be provided within a year and at what cost.

"If those services are not provided by the end of the year, then that fee will get refunded," Mr Mota said.

The company's executive team is still being finalised as it regroups.

Mr Mota said 14 financial advisors had been sacked for providing poor quality advice.

"We've had to challenge our attitudes and behaviour," he said,

"We're learning from these past failings."

Representatives from funds including AustralianSuper, Rest and Host-Plus also travelled to Canberra's Parliament House for the hearings.