The Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking (EU) from Macquarie Equities Limited (MEL) following surveillance that found recurring compliance deficiencies in the group’s advisers, and in the supervision of those advisers.
The surveillance, which commenced in December 2011, found MEL had failed to address recurring compliance deficiencies involving a significant number of its advisers. Those deficiencies were initially identified by MEL’s own client file reviews dating back to 2008, ASIC stated.
They included client files not containing statements of advice; advisers failing to demonstrate reasonable basis for advice provided to a client; poor client records and lack of detail contained in advice documents; lack of supporting documentation on files to determine if there was a reasonable basis for advice provided; and failing to provide sufficient evidence that clients were sophisticated investors, ASIC said.
Those deficiencies were not reported to ASIC and remediation attempts had been ineffective. MEL has now agreed to a review of its Macquarie Private Wealth (MPW) business, including its licence risk and operating model and systems and its legal and regulatory obligations, ASIC stated.
Responsibility for compliance at MPW will now be integrated within the Macquarie Group-wide compliance function. MEL will now be required to develop and implement a plan to rectify any licence risk management and compliance deficiencies.
The plan will need to address ASIC concerns, including the failure to maintain a culture with proper commitment to compliance and the effectiveness of its licensee risk processes, controls and systems.
The plan will also need to deal with compliance standards of MPW advisers in an appropriate and consistent manner, properly address recurring issues, and ensure compliance with the obligations on personal advice, general advice and execution-only dealing transactions.
There will also need to be adequate consideration of personal circumstances where advice is given to retail clients and MPW advisers must ensure adequate record keeping and related controls over client records to enable MEL to appropriately supervise its representatives.
MEL must also ensure appropriate assessment of breaches and reporting to ASIC.
The plan must be independently assessed by an expert who will report regularly to ASIC over the next two years on the implementation of the plan.
Where a client is identified as having been adversely impacted due to the failings of a MEL representative, MEL is obliged to notify ASIC of the circumstances and to remediate the client where appropriate, ASIC stated.
