Macquarie advisers caught out, wealth unit under review

29-Jan-2013

By Kate Kachor

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Macquarie Equities Limited (MEL) has entered into an enforceable undertaking (EU) with ASIC and agreed to review its private wealth business after surveillance found recurring compliance issues involving a significant number of its advisers.
 
The EU followed a lengthy period of surveillance, dating back to December 2011, by the corporate regulator, which involved the review of MEL’s compliance systems and a significant number of client files, ASIC said in a statement.
 
ASIC found MEL had failed to address “recurring compliance deficiencies that involved a significant number of its advisers”.
 
“These deficiencies were initially identified by MEL’s own client file reviews dating back to 2008,” it said.
 
The deficiencies include instances of client files not containing statements of advice, advisers failing to demonstrate a reasonable basis for advice provided to the client, poor client records and lack of detail contained in advice documents.
 
Other compliance concerns included a lack of supporting documentation on files to determine if there was a reasonable basis for the advice provided to the client, and failing to provide sufficient evidence that clients were sophisticated investors.
 
“ASIC’s review found these deficiencies, which were not reported to ASIC, to be serious and that any remediation initiatives attempted by MEL over a four-year period had been ineffective,” it said.
 
“MEL has agreed to a review of its Macquarie Private Wealth business, including its licence risk and operating model and systems and its legal and regulatory obligations.”
 
The regulator said it was concerned the responsibility for compliance “sat within” Macquarie’s private wealth business and “MEL has taken steps to integrate compliance within and reporting to the Macquarie Group-wide compliance function”.
 
“Our surveillance found Macquarie Private Wealth fell significantly short of this mark, so ASIC took action,” ASIC chairman Greg Medcraft said.
 
“This is a major EU affecting one of the wealth industry’s biggest players, which we believe will rectify some serious compliance deficiencies.”
 
As part of the EU, MEL is required to develop and implement a plan to rectify any licence risk management and compliance deficiencies with the help of an independent expert.
 
The independent expert would report regularly to ASIC over the next two years on MEL’s implementation of the plan, ASIC said.
 
“If the review identifies a client has been adversely impacted due to the failings of a MEL representative, then MEL is obliged to notify ASIC of the circumstances and to remediate the client where appropriate,” it said.
 
 
MEL is a subsidiary of Macquarie Group Limited and is authorised under its Australian financial services licence to offer financial advice.
 
The subsidiary carries on a financial product advice business in Australia under the name Macquarie Private Wealth.

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