On Tuesday, 5 April, ASIC confirmed it had commenced civil penalty proceedings in Federal Court against Macquarie Bank for “failing to adequately monitor and control transactions by third parties, such as financial advisers, on their customers’ cash management accounts”.
ASIC alleged that between 1 May 2016 and 15 January 2020 Macquarie performed “limited” monitoring of transactions through its system and that the transactions did not pass through a fraud monitoring or undergo manual checks.
It’s further alleged that the impact on Macquarie customers includes $2.9 million in unauthorised withdrawals by former financial adviser, Ross Andrew Hopkins, who was convicted in May 2021 and permanently banned from providing financial services just months later.
“Mr Hopkins misused Macquarie’s systems by processing transactions using his fee authority to steal client funds. Macquarie failed to properly detect and prevent these unauthorised fee transactions, many of which were over $10,000 each. Mr Hopkins’ conduct is an example of what can go wrong when banks do not properly monitor their systems and implement appropriate processes,” ASIC deputy chair Sarah Court said.
“ASIC’s case is not focused on Mr Hopkins’ conduct but rather on alleged multiple failures by Macquarie to take proper steps to monitor, detect and prevent unauthorised transactions.”
Macquarie is accused of breaching its obligations as a financial services provider and of making false or misleading representations on the promotion or offering of limited third-party access over cash management accounts.
ASIC is seeking declarations, pecuniary penalties and other relief from the Court, including a compliance order for an independent review of Macquarie’s fee authorities and fee transactions using its bulk transaction system to ensure recommendations regarding improvements are effectively implemented.
ASIC has confirmed that from December 2021, Macquarie did remediate Mr Hopkins’ clients $3.5 million on an ex-gratia basis.
The date for the first case management hearing is yet to be confirmed by the Court.
UPDATE:
The bank has responded to civil penalty proceedings commenced by ASIC.
In a new statement, Macquarie said that it has cooperated with ASIC’s investigation.
“ASIC’s court filing notes that this issue arose in relation to 13 clients of an independent financial adviser between 2016 and 2019, who has since pleaded guilty to fraud. Following the independent adviser’s failure to compensate his clients for their losses, Macquarie fully reimbursed the 13 clients,” the statement read.
“Macquarie treats the security of its clients’ accounts with the utmost seriousness, and has continued to introduce new controls and processes to respond to the evolving external fraud environment.”
