summary of the conflicts of interest management policy

Conflicts of Interest Management Framework (Part 1) Policy

This Policy applies to IOOF Holdings Limited, its subsidiaries and related bodies corporate (as defined in the Corporations Act 2001) (IOOF)

29 August 2016

IOOF Conflicts of Interest Management Policy

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Contents

1 Overview 3

1.1 Introduction 3

1.2 Policy statement 3

1.3 Scope and application of this policy 3

1.4 The Conflicts of Interest Management Framework 3

2 Key concepts and definitions 4

3 Roles and responsibilities 6

3.1 Board responsibilities 6

3.2 Your role 7

3.3 Specific additional responsibilities for directors 7

3.4 Governance Services team roles in management of conflicts 7

4 IOOF’s Legal Obligations 8

4.1 Obligations as an AFS Licence holder 9

4.2 Duties of company officers and directors 9

4.3 Obligations as a listed entity 9

4.4 Obligations as an RSE Licensee 9

4.5 Other obligations to prioritise beneficiary interests 10

4.6 Conflicts relating to credit licensees 10

4.7 Conflicts affecting New Zealand schemes and financial services 10

5 Your specific obligations under this Policy 10

5.1 Obligations affecting all personnel 10

5.2 Board and directors’ conflicts of interest 12

5.3 Related party transactions, corporate conflicts and in-house products 12

5.4 Superannuation Relevant Duties and Relevant Interests 13

5.5 Research conflicts 13

5.6 Placement fees 13

6 Conflict Management Process 14

6.1 Identify the actual or potential conflict 14

6.2 Report to Group Compliance or the Company Secretary 14

6.3 Assess the conflict 14

6.4 Record the conflict 14

6.5 Treating, managing and monitoring conflicts 14

7 Policy Governance 15

7.1 Training 15

7.2 Review and approval 15

7.3 Further information 15

8 Document release information 16


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1 Overview

1.1 Introduction

The IOOF Conflicts of Interest Management Framework is set out in two parts:

Part 1: IOOF Conflicts of Interest Management Policy (the Policy); and

Part 2: IOOF Conflicts of Interest Management Procedures and Guidelines (the Procedures).

The Policy sets out the IOOF Group approach and rules in relation to the identification and management of conflicts of interest; the Procedures set out the processes we have implemented and the guidelines we follow in order to adhere to the Policy requirements.

This Policy sets out the Board’s expectations of the type of conduct and behaviour that is acceptable when conflicts or potential conflicts are present.

The Procedures should be read in conjunction with the Policy.

1.2 Policy statement

The requirement to properly identify and manage conflicts stems from a combination of statutory and common law requirements, prudential standards, regulatory guides, industry best practice and IOOF’s Code of Conduct.

IOOF delivers a high level of quality service to our clients and rigorously supports ethical behaviour. As a condition of employment, employees are expected to conduct their activities and responsibilities with integrity and fair dealing. The IOOF Code of Conduct also contains this requirement and is attested to on appointment and again annually by all staff. The Code of Conduct also emphasises IOOF’s values (which include integrity) and are incorporated into the recruitment and performance review process for all staff.

Conflicts can potentially interfere with the integrity of decision making. If decisions or services are tainted by conflicts, this could damage IOOF’s reputation with clients, investors, superannuation members, stakeholders, regulators and the broader community by diminishing their confidence in our ability to treat them fairly and honestly.

For these reasons, the Board is committed to ensuring that all directors and personnel comply with this Policy and that actual or potential conflicts of interest and/or duty are identified, recorded, assessed, managed and monitored in accordance with this Policy and the Procedures.

When a conflict cannot reasonably be managed it must be avoided.

1.3 Scope and application of this policy

IOOF is referred to in this Policy as ‘IOOF’, ‘us’, ‘our’ or ‘we’.

All staff, directors, agents, contractors, Representatives, actuaries and relevant auditors - and officers of IOOF are required to comply with the Policy (referred to in the Policy as ‘you’ or ‘your’).

‘IOOF’ refers to IOOF Holdings Limited and its wholly-owned subsidiaries including its Australian Financial Services (AFS) Licensees, Registrable Superannuation Entity (RSE) Licensees and its registered Life Company and Life Non-Operating Holding Company (NOHC).

In the event of any inconsistency between the Policy and statutory or regulatory requirements, the latter prevails. The Policy considers conflict management requirements applicable in Australia and to the extent applicable, to IOOF’s New Zealand financial services and products.

1.4 The Conflicts of Interest Management Framework

The IOOF group has a Conflicts of Interest Management Framework (the Framework) in place to ensure we meet our clients’, investors’ and members’ expectations that we will deal with them fairly and put their interests ahead of our own.


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The Framework is the totality of systems, structures, policies, processes and controls within IOOF’s business operations that identify, assess, mitigate, manage and monitor conflicts of interest. The Framework forms part of the broader Compliance Framework and is designed to provide reasonable assurance that all conflicts are being clearly identified, avoided or prudently managed.

The Framework is illustrated below:

2 Key concepts and definitions

Alternative Remuneration as referred to in this Policy covers non-monetary or ‘soft dollar’ benefits provided to or received by an AFS licensee, an authorised representative or other representative that provides advice to retail clients.

APRA Regulated Entities as referred to in this Policy covers our registered Life Company (IOOF Ltd) and Non-Operating Holding Company (IOOF Group Ltd) and our Registrable Superannuation Entity (RSE) Licensees (IOOF Investment Management Limited and Australian Executor Trustees Limited).

Beneficiaries are our clients, to whom we owe a duty to act in their best interests in the event of a conflict of interest including:

Investors in a managed investment scheme or IDPS and IDPS-like product.


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Persons with a beneficial interest in a superannuation fund (which could potentially include current members, pensioners, reversionary beneficiaries, spouses or ex-spouses where there is a spouse account or family split, and potential beneficiaries of a death or insurance benefit under the fund rules).

Owners or prospective owners of Friendly Society benefit fund policies.

Clients of financial advice providers (where the potential conflict relates to advice provided).

Beneficiaries of trusts where we provide trustee or custodial services.

Conflict for the purpose of this Policy, means a Conflict of Interest and/or a Conflict of Duty. In a superannuation context, a Conflict exists where there is a conflict:

a) between the duties owed by an RSE licensee, or a responsible person of an RSE licensee, to Beneficiaries and the duties owed by them to any other person;

b) between the interests of Beneficiaries and the duties owed by an RSE licensee, or a Responsible Person of the RSE licensee, to any other person; and

c) between an interest of an RSE licensee, an associate of an RSE licensee or a Responsible Person or an employee of an RSE licensee, and the RSE licensee’s duties to Beneficiaries; and (d) between an interest of an RSE licensee, an associate of an RSE licensee or a Responsible Person or an employee of an RSE licensee and the interests of Beneficiaries.1

A Conflict of Duty arises when a person has competing loyalties and a duty to one entity may conflict with or reduce their ability to perform their duty to another entity.

A Conflict of Interest exists whenever a person or company has competing personal, financial, professional or ownership interests that could undermine their impartiality and potentially influence their decision making.

The Conflict Owner is the person that Group Compliance has determined will be responsible for implementing the treatment plan, ensuring that the identified Conflict does not materialise and impact on our business, and providing periodic attestations to Group Compliance in relation to the ongoing treatment of the Conflict.

Control Owners are IOOF staff that have been assigned responsibilities for providing attestations through OneSum, IOOF’s risk management and compliance tool.

Inside Information is information which is not generally available and if it had been announced to the market, a reasonable person would expect it to have a material effect on a listed share price.

When we provide research information on a security (excluding a managed investment scheme) we must disclose on our website any material interest that IOOF and associates (as defined in Div 2 of Pt 1.2 of the Corporations Act 2001) have in the particular security. Material Interest is defined as a holding of 5% or more of the ordinary shares.

In respect of directors, a Material Personal Interest is where there is a relationship or interest held by the director that is of real substance to a matter or arrangement being considered, has the capacity to influence the director and is of considerable importance, size or worth.

A Related Party, as defined in s228 of the Corporations Act 2001 and RG76, can be:

An entity that controls a public company.

Persons who are related parties of a public company including:

(i) Directors of the public company.

(ii) Directors of an entity that controls the public company.

(iii) Spouses and de facto spouses of the persons in (i) and (ii).

(iv) The parents and children of the persons above in (i), (ii), (iii).

An entity controlled by a related party unless it is also controlled by the public company.

An entity can also be a related party of a public company if it: was a Related Party of the company at any time within the previous 6 months; or believes or has reasonable grounds to believe that it is likely to become a Related Party of the company at any time in the future; or acts in concert with a Related

1 APRA Prudential Standard SPS 521.7


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Party of the public company on the understanding that the Related Party will receive a financial benefit if the public company gives the entity a financial benefit.

A trust or managed investment scheme for which any IOOF entity acts in a Trustee or Responsible Entity capacity and any entity controlled by this trust or scheme.

A Related Party Transaction is any transaction entered in to by IOOF or a managed investment scheme where a financial benefit is provided to a Related Party of IOOF. Related Party transactions often involve a Conflict eg where the Related Party is in a position of influence over a decision or the terms on which a service or product is provided.

A Relevant Duty is any duty owed by an RSE Licensee or Responsible Person to Beneficiaries or any other person that the RSE Licensee considers relevant because it might reasonably have the potential to significantly impact on the RSE Licensee acting in the members’ best interests.

A Relevant Interest is an interest of the RSE, an associate of the RSE Licensee or a Responsible Person that the RSE Licensee considers relevant because it might reasonably have the potential to significantly impact on the RSE Licensee acting in the members’ best interests.

Representatives are all employee representatives, authorised representatives, financial advisers and financial planners authorised to provide financial advice, issue or arrange financial products. Representatives that are not employees of IOOF are required to adhere to the conflicts of interest and non-monetary (soft dollar) benefit requirements set out in the applicable Representatives Manuals which form part of the IOOF Conflicts of Interest Management Framework.

A Responsible Person is personnel considered by an APRA Regulated Entity to be a Responsible Person under APRA Prudential Standard CPS 520 or SPS 520 as documented in the Responsible Persons Policy.

3 Roles and responsibilities

3.1 Board responsibilities

The Boards of each of the companies within the IOOF Group are responsible for ensuring a strong culture exists around identifying, disclosing and managing conflicts of interest. They are responsible for ensuring that directors and personnel at all levels put the interests of clients, investors, members and shareholders ahead of their own interests and at all times treat them fairly.

The directors of each company covered by this Policy are responsible for the development and maintenance of the conflicts framework within that company.

In addition, the directors of each RSE Licensee must also review and approve any updates to the Conflicts of Interest Management Framework including this Policy and must be able to demonstrate that:

it remains appropriate for the size, business mix and complexity of the business;

all potential or actual conflicts are identified; and

all reasonably practicable actions are taken to avoid, or prudently manage conflicts.2

The IOOF Boards are responsible for setting the “tone at the top” by demonstrating compliance with this Policy and for embedding their expectations around compliance with the Policy throughout the IOOF Group. The Boards must take reasonable steps to ensure that all personnel understand the Policy and Procedures, the need to identify potential conflicts and the circumstances that might give rise to a potential conflict.3 This is done in practice by dissemination of the Policy to all staff, annual training and reporting by Group Compliance to the Risk and Compliance Committee and Boards.

The Boards are responsible for periodically monitoring the compliance performance of the business. This includes the processes in place to identify, report and manage conflicts of interest and conflicts of duties.

2 APRA Prudential Standard SPS 521.8 3 APRA Prudential Standard SPS 521.11


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3.2 Your role

You are required to identify and manage conflicts of interest and conflicts of duties in accordance with this Policy. This includes:

Reporting potential and actual conflicts in the manner described in the Procedures.

Not putting yourself in a position where your personal interests would result in a breach of this policy or our Code of Conduct.

Working with Group Compliance to develop treatment plans for any identified conflicts.

Providing periodic updates to Group Compliance on adherence to any treatment plans for managing identified conflicts.

3.3 Specific additional responsibilities for directors

Directors have a duty to avoid conflicts of interest and should avoid entering into transactions or voting on any matter where they have a Material Personal Interest or are conflicted. They must not place themselves in a position where there is an actual, perceived or substantial possibility of a conflict between a personal interest and a duty owed to beneficiaries or the IOOF Group.

It is recognised that situations may occur that give rise to a Material Personal Interest or a Conflict of Interest or duties. Each director is responsible for ensuring that any actual or perceived conflicts of interest or duty or a Material Personal Interest that he/she is unable to avoid, or that may impact his/her ability to perform their fiduciary and statutory duties, are disclosed to the Board so that appropriate action may be taken to address the conflict.

It is each director’s responsibility to ensure that any perceived or actual Conflict or Material Personal Interest that is disclosed by their fellow directors, is fully and completely discussed so that they may make informed decisions about how it should be handled.

A director who has a Material Personal Interest in a matter must also abstain from voting on the matter or attending any meetings whilst the matter is being considered, unless approval has been granted in line with regulations in this regard.

Conflicts declared in IOOF Board and Board Committee meetings must be documented in the minutes along with the treatment plans and managed in accordance with section 5.2 of this Policy and the Procedures.

3.4 Governance Services team roles in management of conflicts

The conflicts management responsibilities of teams within Governance Services are set out below:

Group Compliance:

o Ensuring effective management of conflicts of interest by creating, implementing, maintaining and monitoring the Conflicts of Interest Management Framework as required in this Policy and the Procedures.

o Documenting and assessing reported conflicts in consultation with the Conflict Owner.

o Documenting and assessing the adequacy of treatment plans.

o Conducting an annual review and update of this Policy.

o Monitoring compliance with this Policy through positive assurance and other methods as determined when the conflicts are documented and assessed.

o Monitoring the implementation of conflict treatment plans and where considered necessary, escalating or seeking alternative treatment plans.

o Providing regular updates to the Risk and Compliance Committee on conflict management including reporting new conflicts, the status of treatment plans, including delays in implementation of treatment plans, and periodically providing copies of registers. Where considered appropriate, updates on conflicts management should also be provided to the Board.


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o Implementing steps to return to, and improve ongoing compliance of any non-compliance identified through either internal monitoring (including via OneSum) or through issues reported in RiskVision.

Company Secretary:

o Ensuring Board submission templates require the highlighting of potential conflicts, and in which capacity the Board is acting when considering matters that present potential conflicts.

o Ensuring agenda items make it clear in which capacity the Board must act when considering the matters and ensuring appropriate focus on matters considered in similar capacities.

o Ensuring in meetings of entities where there are multiple Beneficiaries and roles (for example where the entity is one or more of an RSE Trustee, Responsible Entity, Investment Manager, ASX market participant, Advice business, Investment Manager or custodian) a declaration by the Chairman to demonstrate how beneficiary interests were at the forefront of decisions made when matters presenting a potential conflict of interest were tabled.

o Ensuring there are procedures in place to assist the Board in defining when directors should abstain from voting and if a director abstains, how Board effectiveness is protected.

o Preparing Board minutes including confirmation of conflicts declared, how they were managed and for each decision noted in the minutes, in which capacity the decision was made.

o Reporting to Group Compliance any non-commercially sensitive conflicts and treatment plans after the minutes have been completed and reviewed.

o Maintaining a register of confidential Conflict disclosures relating to commercially sensitive matters.

o Providing directors with access to independent advice if requested to help ensure that they have declared and appropriately managed or avoided all relevant conflicts of interest.

Legal:

o Reviewing any Related Party contracts before they are executed to ensure they are on arms-length commercial terms, and if any potential conflicts of interest are identified, reporting the arrangement and treatment plan to Group Compliance.

o Maintaining the Related Party contracts register.

o Providing legal advice on the nature and extent of duties owed by entities within the IOOF group (as required).

Enterprise Risk and Chief Risk Officer APRA Regulated Entities:

o Facilitating business unit risk assessments, which includes the assessment of material risks and the risk management strategies in accordance with the Group Risk Management Policy, reporting to the Boards’ RCC. Governance is defined as a material risk within the Group Risk Management Policy, and the risk and management of conflicts of interest is included in the risk assessments, as applicable.

Compliance and Professional Standards (CAPS):

o Supervision and monitoring of Representatives that are not IOOF employees as set out in the Procedures and the applicable Representatives Manuals.

4 IOOF’s Legal Obligations

IOOF is committed to ensuring its personnel and Representatives comply with their legal obligations in the provision of financial services to its clients, investors and superannuation members. This includes the following legislation that is relevant to the identification and management of conflicts of interest.


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4.1 Obligations as an AFS Licence holder

AFS Licensees must have adequate arrangements in place to manage conflicts of interest that may arise in relation to the activities undertaken by the AFS Licensee or its representatives when providing financial services, and to provide the financial services efficiently, honestly and fairly under s912A of the Corporations Act 2001. The following ASIC Regulatory Guides also provide further Conflict of Interest management obligations:

RG 181: Licensing: Managing conflicts of interest.

RG 246: Conflicted remuneration provide further guidance for Licensees.

RG 79: Research report providers: Improving the quality of investment research.

RG 76: Related Party transactions.

This does not mean that an AFS Licensee can never provide financial services where a Conflict may exist, however the AFS Licensee must effectively manage all conflicts.

4.2 Duties of company officers and directors

The duty to avoid a Conflict of Interest is also part of the fiduciary obligations of the company’s officers and directors to:

Exercise care, skill and diligence.

Act in good faith and for a proper purpose.

Disclose and properly treat any Material Personal Interest in matters being considered.

Prioritise APRA Regulated Entity Beneficiaries’ interests over other interests if there are conflicts.

Not gain an improper advantage for itself or someone else.

The Corporations Act 2001 codifies the fiduciary duties in s180-184 and includes the requirement:

Not to have a Material Personal Interest in a subject matter requiring their judgement.

To discharge their duties in good faith and in the best interests of the company and for proper purpose

Not to improperly use their position, or information acquired because of their position, to gain an advantage for themselves or someone else or cause detriment to the corporation.

To act in the best interest of the company.

4.3 Obligations as a listed entity

IOOF is an Australian Securities Exchange (ASX) listed entity and is required under ASX Listing Rule 4.10.3 to comply with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. One of these is to act ethically and responsibly and to promote a culture that promotes ethical and responsible behaviour through its Code of Conduct and Policies. This Policy aims to promote such a culture.

4.4 Obligations as an RSE Licensee

RSE Licensees have additional Conflict of Interest management obligations under s52(2)(d) of the Superannuation Industry (Supervision) Act 1993 and APRA Prudential Standard - SPS 521: Conflicts of Interest (SPS 521).

The RSE licensees are required under SPS 521 to develop, implement and review a conflicts management policy that is approved by the Board, identify all Relevant Duties and Relevant Interests, and develop registers of relevant duties and relevant interests.

Interests of persons with a beneficial interest in a superannuation fund must be prioritised over the interests of any other person or the trustee in the event of a Conflict under s52(2)(d)(i) of the


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Superannuation Industry (Supervision) Act 1993. (This could potentially include current members, pensioners, reversionary beneficiaries, spouses or ex-spouses where there is a spouse account or family law split, and potential beneficiaries of a death or insurance benefit under the fund rules).

4.5 Other obligations to prioritise beneficiary interests

A Responsible Entity of a managed investment scheme is required under s601FC(1)(c) of the Corporations Act 2001 to prioritise member interests over the interests of the Responsible Entity.

A Friendly Society must prioritise the interests of owners or prospective owners of Friendly Society benefit fund policies in the event of a Conflict of Interest according to s32(1)(b) of the Life Insurance Act 1995.

Advisers must act in the best interests of clients according to s961B(1) of the Corporations Act 2001.

4.6 Conflicts relating to credit licensees

Australian Credit Licensees (ACLs) must comply with their conflicts of interest management obligations under the National Consumer Credit Protection Act 2009 and ASIC Regulatory Guide 205 to have adequate arrangements in place to ensure that clients are not disadvantaged by any conflict of interest that may arise wholly or partly in relation to credit activities engaged in by the ACL, its personnel and representatives.

4.7 Conflicts affecting New Zealand schemes and financial services

Where financial services are provided and schemes are offered by a New Zealand company, guidance provided by the New Zealand Financial Markets Authority must be followed, including obligations to:

Carefully consider roles, responsibilities, locations, and reporting lines of different managed scheme functions to ensure they are designed to enable robust checks and balances, and to minimise the risk of collusion or conflicts of interest.

Carefully consider potential conflicts of interest and provide clear guidelines on how they will be addressed for a managed scheme.

Clearly identify, manage and disclose actual and potential conflicts of a financial services provider, particularly how staff are paid or incentivised.

Explain why a financial services provider believes its approach is aligned to customer interests. This includes what services and products are recommended to customers, and how any performance benefits (such as returns) are shared with the customer.

Clearly explain any arrangement that a financial services provider has with associated parties.

In addition to these obligations, there is an obligation under IOOF New Zealand Ltd’s company constitution that when dealing with conflicts of interest between another IOOF Group company and IOOF New Zealand Ltd, the interests of IOOF New Zealand Ltd must be prioritised over the interests of the IOOF Group.

5 Your specific obligations under this Policy

5.1 Obligations affecting all personnel

Compliance with the Conflicts Framework

You must comply with IOOF’s Code of Conduct and the Conflicts of Interest Management Framework including the Policy and the Procedures. Failure to report and treat conflicts in accordance with the Policy and Procedures may result in disciplinary action, including removal from an Executive, Responsible Person, Responsible Manager or Responsible Executive position.


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If you are uncertain as to whether a Conflict of Interest should be disclosed in accordance with this Policy, you should consult with Group Compliance, or for directors, the Group General Counsel or Company Secretary.

To treat potential remuneration conflicts and promote compliance with this Policy and other IOOF policies, from 1 July 2016 IOOF’s Performance Management System will include a governance gate so that there is a direct consideration of governance behaviours in staff performance management.

Gifts, entertainment and alternative remuneration

During the normal course of business, gifts of a nominal value are sometimes exchanged with external parties.

Gifts in the form of cash, loans, securities or their equivalent are not to be offered or accepted. It is also prohibited to offer or accept gifts or entertainment from government officials or regulatory bodies, other than working lunches in the ordinary course of business.

If a third party’s primary purpose is to obtain business from us or influence decision-making through the offer of gifts or entertainment, such offers are to be declined. Good judgement is to be exercised in all circumstances. It is equally important that you do not use the offer of gifts or entertainment to try to influence the decision of another party.

You must report all gifts, entertainment or other alternative forms of remuneration related to your employment at IOOF and worth more than $300 to Group Compliance in accordance with the Procedures. AFS Licensees that provide financial product advice to retail clients, and product issuers that provide non-monetary benefits to them, must also maintain records of non-monetary benefits over $100 in accordance with the Procedures. Where possible disclosure should happen before acceptance of the offer.

Prohibition on borrowing and lending by personnel

You must not borrow from or lend to clients or suppliers, except where this is their usual course of their business (for example, where your client is a bank). Even then, the borrowing or lending must only be on terms offered to others in similar circumstances when it comes to interest rates, terms, security, repayment, and the like.

Other conflicts of interest that could involve personnel and/ or IOOF companies

You must not use your position or use information obtained through your position to gain an advantage for yourself or someone else including an IOOF company.4

This prohibition includes the following types of potential conflicts:

Inside information Situations where you come across inside information on other companies or funds that could be used for your personal gain or the benefit of IOOF.5

Client conflict Situations where you or IOOF receive a personal gain at the expense of our clients, investors or superannuation members.

Outside influence Situations where you or IOOF have an external relationship and you, IOOF or external party receive a personal gain. This also includes situations where external parties use their influence over you or IOOF for their own gain.

Remuneration conflicts Remuneration conflicts may arise where you are offered an incentive to achieve an outcome that may be, or reward behaviours that are, in conflict with the best interests of clients, investors and superannuation members. (For example, setting a $1million target for IPO revenue for the direct equities team). Executive and director remuneration must be reviewed by a remuneration committee and is subject to the requirements of remuneration and governance policies. Under the IOOF Group Policy - Personal Trading in IOOF Holdings Limited Securities, staff must not

4 ss 182, 183 Corporations Act 2001 (Cth). 5 Communication of inside information is prohibited, s 1043A Corporations Act 2001 (Cth).


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enter into a hedging transaction (including using derivatives) to remove the “at risk” aspect of any IFL securities granted to them as part of their remuneration package.

Personal relationships

Situations where you may be directly related to or in a relationship with another employee that is a direct report or a line manager may give rise to a conflict of interest when considering performance assessments and remuneration decisions. The manager/subordinate dynamics may also impact on the carrying out of their duties to IOOF. Such relationships must be reported to the Human Resources department who will consider the appropriate action to take, which may include reporting the situation to Group Compliance.

5.2 Board and directors’ conflicts of interest

If you are a director, you must disclose to all other directors at each Board or committee meeting:

Any Material Personal Interest you have in a matter which relates to the affairs of the company.

Any other interest which you believe should be disclosed in order to avoid an actual Conflict of Interest or the perception of a Conflict of Interest.

You should make this disclosure as soon as practicable after you become aware of the interest or the need to make a disclosure and the Procedures must be followed to manage the Conflict.

If multiple directors are conflicted in relation to a particular matter, the Chair must consider implementing other steps to ensure that either the Board is able to effectively consider the matter in the absence of the conflicted directors or the conflict is to be avoided entirely.

If you are a director of multiple companies across IOOF, this may give rise to potential conflicts that could impact on the corporate decision making process.

In all cases, you should refer to the Procedures we have put in place to ensure that your duties can be met despite the potential conflicts and that the interests of Beneficiaries are not adversely impacted.

Directors must also consider all conflicts highlighted in Board submissions and ensure that conflicts are either avoided or appropriately treated, as considered appropriate.

5.3 Related Party transactions, corporate conflicts and in-house products

The Corporations Act 2001 provides that public companies must not give a financial benefit to a Related Party without the approval of the members of the company unless the giving of that benefit falls into one of the exceptions in the legislation including that it is performed at arm’s length and on commercial terms. This rule also applies to a Responsible Entity of a managed investment scheme.

ASX Listing Rule 10.1 also governs Related Party transactions – stating that approval is required from security holders for certain transactions.

Therefore all proposed commercial transactions between related bodies corporate must first be approved by one or more members of the Leadership Group, who must consider whether the terms are at arm’s length and commercial. Group General Counsel and/or internal/external legal advisers must be consulted to ensure the arrangement is legal and that the transaction is performed at arm’s length and on commercial terms. All Related Party transactions must be approved by the Board after Legal sign off has been obtained.

Appointment of related service providers

Even when a transaction or outsourced arrangement is completed on an arm’s length basis with a Related Party, conflicts of interest may arise from those arrangements that need to be identified, documented and addressed to ensure that priority is given to the duties and interests of the Beneficiaries; that duties are met despite the Conflict and that Beneficiaries are not adversely impacted by the Conflict.

In all cases, you should refer to the Procedures to ensure that there are appropriate treatment plans to manage conflicts arising from Related Party transactions. In addition, the Vendor Management and Outsourcing Policy sets out the minimum standards which must be followed when acquiring services from related parties, including the consideration of potential or actual conflicts as part of the due diligence and ongoing monitoring processes.


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Investment in IOOF products

Care must be taken when determining and monitoring whether IOOF products should select other IOOF in-house products to invest in. This includes fund of fund multimanager arrangements, options on platforms including when a default cash option is chosen, and underlying friendly society benefit funds.

To manage this type of Conflict, the parties must deal with each other at arm’s length from a pricing perspective, the in-house investor should be treated no more favourably than an external investor, appropriate information barriers must be in place and the investments must be subject to the same scrutiny as an external option.

Requirements for managing these types of conflicts are set out in the Procedures and as part of the applicable investment governance framework, and may include the use of external experts to assist with independently assessing internal investments, consideration of the appropriateness of any performance fees and whether they should be forgone if the performance is not delivered.

Purchase or sale of securities

Client requests to participate in offers of securities made available through an IOOF owned platform must be prioritised over any allocation of securities that IOOF wishes to participate in as a principal.

5.4 Superannuation relevant duties and relevant interests

RSE Licensees are required to prepare and publish registers of relevant duties and relevant interests on their website as part of their conflicts management frameworks. If you are a Responsible Person of an IOOF RSE you must supply Group Compliance with information on new, or changes to, your relevant interests and relevant duties as they arise. In the Procedures we provide examples of interests that the RSE Licensee is likely to consider relevant.

5.5 Research conflicts

Conflicts of interest must never compromise the integrity of the advice given in IOOF’s research reports and at all times IOOF’s Research teams must act efficiently , honestly and fairly when preparing and issuing research reports.

IOOF management must ensure that the business units are structured to minimise and manage conflicts. They must have adequate controls in place to manage conflicts including avoiding those that cannot be managed and provide meaningful disclosures to help users of research reports understand conflicts and how they are managed. At all times, research Reports issued by IOOF must have enough information to allow users to form a realistic view about the potential impact of any conflicts of interest on the quality and objectivity of the research service.

The Procedures that we have developed must be followed to ensure our research is independent, unbiased and is not compromised by any dealings of any other part of the company.

5.6 Placement fees

Our AFS Licensees may take a placement or similar fee in the course of an IPO where an IOOF Research team has published a research report on the security the subject of that IPO. However, in this situation, IOOF should:

Publish the research report after the prospectus has been lodged with ASIC.

Ensure that this Policy and the Procedures are followed in preparing the research report.

Include a statement in its research report which satisfies the disclosure ‘exception’ in s 734 of the Corporations Act 2001.

Include a further statement in its research report disclosing that it will receive a placement fee or other benefit in connection with the IPO.


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6 Conflict Management Process

This section provides an overview of the process that must be followed to deal with identified conflicts. Further detail is provided in the Procedures.

6.1 Identify the actual or potential Conflict

If you identify an actual, apparent or potential Conflict of Interest you should discuss this with your manager in the first instance. Group Compliance will also provide you with guidance and confirm whether a conflict exists.

6.2 Report to Group Compliance or the Company Secretary

Once an actual, apparent or potential Conflict of Interest has been identified, it must be reported to Group Compliance. Commercially sensitive matters identified in Board meetings must be reported to and documented in a confidential register maintained by the Company Secretary.

6.3 Assess the Conflict

Group Compliance must meet with the Conflict Owner, complete an assessment and determine the course of action to be taken including whether any further treatment of the Conflict is required.

6.4 Record the Conflict

Governance Services maintain a number of registers and will determine in which register or registers the Conflict must be recorded in as set out in the Procedures. The registers include:

Conflicts Register

Sensitive Conflicts Register

Gifts, Entertainment and Alternative Remuneration (Soft Dollar) Register

RSE Licensee Registers of Duties and Interests

Related Party Contracts Register

Research Interests

Trading Registers

6.5 Treating, managing and monitoring Conflicts

You must consult with Group Compliance around how best to manage, treat and monitor the Conflict.

Each Conflict of Interest needs to be separately considered and treated based on the circumstances. The treatment plans that Group Compliance will work with you to implement will fall into one of the categories set out below: Further information on when each type of treatment plan would be considered to be an appropriate response is set out in the Procedures. Options are:

Avoiding the conflict.

Controlling the conflict.

Disclosing the conflict.

Monitoring the conflict.

Further information on when each type of treatment plan would be considered to be an appropriate response is set out in the Procedures.

Identify Report Assess Record Treat,

Manage & Monitor


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7 Policy Governance

7.1 Training

Training on this Policy and the related Procedures must be provided to ensure everyone covered by this Policy has a sound awareness of the Policy and understanding of the process for identifying, managing and reporting conflicts of interest and the associated registers that must be maintained. This training must include:

Compulsory, assessed induction and ongoing training to all staff via an e-learning module.

Publication of this policy on the HQ intranet site by Governance Services so it is available for all staff to access.

Provision of this Policy and the Procedures to all new Responsible Persons, Responsible Managers and Responsible Executives by Compliance on appointment along with a briefing to enable them to provide a declaration of interests and their declaration of compliance with this policy on appointment and quarterly.

Additional targeted training, workshops or reminders for staff and/or directors as considered appropriate.

Reminders should be sent to all staff quarterly around the timing of significant events where guest invitations are common, such as the Melbourne Cup.

At least annually, staff reminders should include a prompt to confirm that staff have read and understood the Policy and disclosed all known conflicts as required under the Policy.

When the Policy is updated, an announcement must be made via a HQ news story or business-wide email.

7.2 Review and approval

This Policy (and each material change to the Policy) must be approved by the IOOF Holdings Ltd Board, each of the RSE Licensee and AFS Licensee Boards including IOOF Ltd, and the IOOF Group Ltd Board (except where non-material changes are made).

Non-material changes must be approved by the Managing Director.

Group Compliance is required to review the Policy and the Procedures on an annual basis and any amendments shall be reported to the IOOF Risk and Compliance Committee.

The RSE Licensees must ensure that a comprehensive independent review of the Conflicts of Interest Management Framework is conducted at least once every three years by an appropriately trained and competent person, and that the results of this review are reported to the RSE Licensee Boards. This review must be added to the Boards’ annual calendars of events and will be conducted by the appointed internal auditor who must present their internal audit report to the Risk and Compliance Committee and applicable Boards.

7.3 Further information

For further information on this policy please contact any member of Group Compliance or the Company Secretary.


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8 Document release information

8.1 File details

File Name Document1

Description Defines and describes conflicts of interest, the principles regarding conflicts of interest, how they are managed, monitoring and reporting of conflicts of interest.

Previous Author(s) Thomas Robertson

Creation Date December 2004

Current Revision Author(s) Andrea Tanner, Compliance Manager

8.2 Revision history

Version Revision Date Author(s) Revision Notes

5.0 August 2010 Thomas Robertson Revision following IOOF-AWM merger

6.0 January 2013 Andrea Tanner Revision to incorporate APRA Prudential Standards

7.0 August 2013 Andrea Tanner Revision to incorporate APRA Feedback

7.1 February 2013 Thomas Robertson Replace Attachment G

8.0 October 2014 Andrea Tanner Update to incorporate business changes including update to Relevant Interest definition and Attachment G

8.1 May 2015 Christine Craig Amendment to Attachment E (b) and sections 16 and 17 to change legal reference to the ASIC Market Integrity Rules (ASX Market) 2010

8.2 June 2016 Andrea Tanner/Christine Craig

Comprehensive re-write of the policy including findings from self-assessment against ASIC Rep 474, Internal audit of compliance with SPS 521 and new Policy writing guidelines.

8.3 Release control

Release Date Approved By Release Notes

24 August 2010 IOOF Holdings Ltd Approved by the Board 24 August 2010

26 March 2013 IOOF Holdings Ltd Adopted by: IOOF Investment Management Limited Questor Financial Services Limited Australian Executor Trustees Limited

Approved by the Board 26 March 2013

29 August 2013 Amendments requested by APRA approved by Managing Director under delegated authority.

Approved by MD 29 August 2013

7 February 2014 Head of Compliance Manuscript amendment

27 October 2014 IOOF Holdings Ltd Adopted by: IOOF Investment Management Limited Questor Financial Services Limited Australian Executor Trustees Limited

Approved by the Board |27 October 2014

22 May 2015 Amendment to Attachment E (b) and sections 16 and 17 to change legal reference to the ASIC Market Integrity Rules (ASX Market) 2010

Approved by the MD 22 May 2015

29 August 2016 IOOF Holdings Ltd, AET, IIML, Questor and IOOF Ltd boards AFS Licensee Boards to adopt

RCC 26 August 2016 Board approved 29 August 2016 subject to RCC ‘s changes

summary of the conflicts of interest management policy

Documents