ASIC highlights Macquarie’s advice and record keeping failures
Macquarie Equities Limited (MEL) had "very poor" record keeping and lack of detail in its advice documents, according to the Australian Securities and Investments Commission (ASIC).
Speaking at a media conference ASIC deputy chairman Peter Kell said the regulator had found examples at MEL's "failure to demonstrate reasonable basis for the advice provided to clients."
"We were concerned about whether there were adequate risk policies and processes and controls in place. We found client files not actually containing the required statement of advice," he said.
The comments come as ASIC announced it will probe into former financial advisers with the Macquarie group MEL and contact 160,000 clients who received advice from Macquarie Private Wealth (MPW) since March 2004, when MEL obtained its Australian financial services licence, about the possible provision of remediation for poor financial advice.
Kell said Macquarie had initially targeted "priority" clients, who might have had problematic advisers, but ASIC had broadened this to include 160,000 clients over the ten years.
However he refused to divulge how many violation reports had been recorded, how many MPW advisers or former advisers are under investigation and how many advisers have lost their jobs due to the enforceable undertaking (EU).
Asked why remediation was not provided during the first stage of the EU, Kell said it took time to investigate who should be covered under the remediation, pinpoint the problematic areas of advice, and the effect on clients. He added they needed to work out if there were particular financial advisers whose clients needed to be given greater priority.
Under the compensation process, clients can request an initial assessment of the advice they got, which will be carried out by a Macquarie advice review committee.
Clients can also ask for an independent assessment of the committee's decision and will be given $5000 to cover those costs.
If they are still unsatisfied they can bring it up with the Financial Ombudsman Service (FOS), which will waive its usual time or monetary claims limits for this case.
If the EU is not effective, ASIC has the ability to imposing conditions on Macquaries Australian Financial Services licence with Kell stating ASIC was prepared to go to court to enforce the EU.
Recommended for you
The Financial Advice Association Australia has released its pre-budget submission, including six key items to help reduce the cost of professional advice and increase its accessibility.
Phil Anderson, general manager for financial advice at the FAAA, believes the CSLR levy could reach $100 million if Dixon Advisory complaints are allowed to continue.
Proposed legislative changes to safe harbour duty could result in advisers having reduced professional indemnity costs, a joint submission by seven major licensees said.
With 66 per cent of newly established advice licensees being sole advisers, what are the risks and legal ramifications to consider when taking the plunge into self-licensing?
