The scandal at financial services group IOOF has reached board level following an explosive speech by Nationals Senator John Williams.  

Senator Williams' speech follows revelations in Fairfax Media of serious misconduct by senior staff at IOOF including insider trading, front-running, misrepresentation of performance figures and cheating on training and compliance exams. 

With any organisation, particularly one as large as IOOF, one would expect the highest standards, the highest ethics and a reputation beyond reproach. 

Senator Williams

His speech came only hours after the Senate voted down a motion by the Greens calling on the Abbott government to launch a royal commission into misconduct in the financial services sector. Labor voted with the government.

Senator John Williams' speech came only hours after the Senate voted down a motion by the Greens calling on the Abbott government to launch a royal commission into misconduct in the financial services sector. Photo: Alex Ellinghausen

IOOF has repeatedly and strongly denied the allegations of misconduct within the company are systemic and has stood by its compliance record. 

Using parliamentary privilege, Senator Williams demanded IOOF head of investigations Rob Urwin explain comments he made to a whistleblower in December 2014 regarding a "board related" investigation he said he was conducting. 

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"I would like more details on the investigation you were talking about that is board related, when you met with the whistleblower over a beer on December 12," Senator Williams said.  

"You said the following, Rob Urwin: 'When you talk to someone in the research team, you're a close tight team. You don't just talk to the person that you want to talk to, you talk to everyone else as well. And you try and get inconsistencies in their stories. By the time you get to who you really want to talk to you've got a lot of mud going like that. And that's what I'm doing with this other one [investigation] and believe me, it's big. If you're still around mate when this one comes out'," Mr Williams said.

Mr Williams said Mr Urwin then told the whistleblower: "It's board related."

On Wednesday IOOF appointed an "independent" adviser to conduct yet another review into allegations of misconduct as the company entered its fifth day of crisis meetings.

On Wednesday, Fairfax Media reported that the company could face a class action. That push came after the company's share price dived 21 per cent to $8.44 on Monday. IOOF's recovered slightly on Tuesday, but the stock fell away again on Wednesday closing down 3.8 per cent, or 36¢, to $9.12.

"Talk about closing the gate after the horse has bolted," Senator Williams said in his speech on Wednesday night.

"As if Australians haven't been sickened by the dodgy financial practices of some at the CBA (Commonwealth Bank), Macquarie Private Wealth and NAB (National Australia Bank) we now have very concerning allegations of insider trading, front-running and even cheating on exams."

"With any organisation, particularly one as large as IOOF, one would expect the highest standards, the highest ethics and a reputation beyond reproach," he said. 

Senator Williams named IOOF head of advice research Peter Hilton "as a person who has allegedly engaged in front-running where he conducted trades on at least 53 occasions over 20 years".

One document relates to an internal investigation into potential front-running by Mr Hilton in 2009. Mr Hilton went on leave this week "until further notice". 

Another document, a "research corrective action plan" written in mid 2014 refers to Mr Hilton instructing a direct report to complete Kaplan training on his behalf. It also refers to "misrepresentation of performance numbers".

The Nationals Senator also named Edward Youds as the now former IOOF staff member who had engaged in insider trading in May 2009. Mr Williams read out extracts of internal emails saying Mr Youds was asked to pay the profit he made on the trade to a charity of IOOF's choice.

Explosive whistleblower testimony and a cache of internal documents seen by Fairfax has shone a light on IOOF's questionable compliance record and decision to keep some of the compliance breaches in house instead of reporting them to the corporate regulator. Some of the documents include a breach report from mid-2014.

Senator Williams also produced documents he said showed IOOF chairman Roger Sexton and two directors of IOOF were alerted in February this year that there were breaches of common law and other regulatory breaches by staff at the company, including suspected insider trading. 

IOOF chief executive Chris Kelaher was also called on by Senator Williams to explain why he allowed Mr Hilton to remain in his position for so long and why Mr Hilton was never reported to ASIC.

Senator Williams also blasted company secretary Danielle Corcoran for sacking a company whistleblower who had gone to her over concerns about Mr Hilton.

"She has treated the whistleblower badly. She gives Peter Hilton a first and final warning  yet sacks a whistleblower!"