License article

Macquarie Equities to tidy up compliance

Macquarie Equities' retail division, Macquarie Private Wealth, has been lambasted by the corporate regulator for ''serious compliance deficiencies'' in the records it kept about retail investors buying and selling shares.

The firm has agreed to implement a strict compliance program and to pay for an independent expert to trawl through client records and books, and interview current and former employees to write regular compliance reports.

Macquarie Private Wealth must also meet monthly with the Australian Securities and Investments Commission to report back on risk tests.

A Macquarie spokeswoman said it was committed to implementing the changes set out in an enforceable undertaking signed today.

‘‘We take our obligations to regulators very seriously. We have a strong track record of compliance practice and if concerns are raised, we work diligently to resolve them.  Accordingly we have been working and will continue to work constructively with ASIC,’’ the spokeswoman said.


However, chairman of AISC, Greg Medcraft, described the sloppy recording-keeping as ‘‘serious’’.

‘‘ASIC is about ensuring investors can be confident and informed and central to this is ensuring financial services are provided efficiently, honestly and fairly.

‘‘Our surveillance found Macquarie Private Wealth fell significantly short of this mark, so ASIC took action. This is a major enforceable undertaking affecting one of the wealth industry’s biggest players, which we believe will rectify some serious compliance deficiencies.’’

The problems were first identified by Macquarie Equities during a 2008 internal review of the client files used by Macquarie representatives, according to an enforceable undertaking signed by the head of Macquarie Group’s retail division, Peter Maher.

‘‘Those reviews indicated compliance deficiencies involving a significant number of the representatives, which were recurring and not reported to ASIC under section 912D of the Corporations Act, nor were they rectified in all cases,’’ the undertaking said of the 2008 review.

This review ceased in early 2010 in favour of coaching and training. But an internal report in November 2011 found that ‘‘a significant proportion of representatives were classified as needing improvements’’ in client record keeping. It also raised concerns about providing evidence that financial advice was based on a ‘‘reasonable basis’’.

ASIC investigated Macquarie Private Wealth from late 2011 to mid-2012 and found the internal systems were ‘‘of limited effectiveness’’.