Macquarie Private Wealth Compliance Found to Be "Deficient" by ASIC

Macquarie Private Wealth, a retail division of Macquarie Group (ASX:MQG), has been found by the Australian financial watchdog ASIC (Australian Securities & Investments Commission) to have compliance deficiencies and have found that a significant number of advisers have breached compliance.

• Four year covert surveillance by ASIC found that Macquarie Private Wealth (MPW) failed to give proper advice to clients and failed to keep proper client records.
• Macquarie Private Wealth will be required to review internal processes and practices.
• ASIC has found that up to 80 percent of Macquarie Private Wealth staff not following rules.
• Hundreds of brokers and advisers failed to keep client proper records which is required under financial services laws.
• Macquarie Equities initially flagged the problem in an internal review in 2008. "Those reviews indicated compliance deficiencies involving a significant number of the representatives, which were recurring and not reported to ASIC ... nor were they rectified in all cases," said Macquarie's retail division head Peter Maher.
• The review ended in early 2010 in lieu of a new coaching and training program.
• ASIC then launched an investigation in December 2011 whereby it found that Macquarie failed in "regarding the provision of personal advice, general advice and execution-only dealing transactions, including necessary detail in advice documents to enable retail investors to make informed decisions."
• Macquarie will now recruit an independent ASIC-approved expert to judge the company’s risk framework. They will then examine staff remuneration, company structure and accountabilities as well as document creation and archiving processes. The outcome will be a preliminary report in 4 months.
• Specifically, the deficiencies include instances of:
  • client files not containing statements of advice
  • advisers failing to demonstrate reasonable basis for advice provided to the 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 the advice provided to the client, and
  • failing to provide sufficient evidence that clients were sophisticated investors.
• Read the ASIC press release here: 13-010MR ASIC accepts enforceable undertaking from Macquarie Equities Ltd