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ASIC ends Macquarie EU but sees gaps in advice files

ASIC ends Macquarie EU but sees gaps in advice files
Macquarie Equities Limited advice files have gaps and require further testing, the Australian Securities and Investments Commission (ASIC) said as the two year enforceable undertaking (EU) into the organisation's advice arm comes to an end.

"While there have been substantial improvements in MEL's operations, further work and/or testing of these operations is required," ASIC said.

ASIC acknowledged that MEL has made "substantial changes in management, business structure, surveillance and compliance, staff training, monitoring and supervision technology and licensee risk governance."

However, the regulator has asked independent expert KPMG to undertake further testing and MEL will have to keep reporting to ASIC over the next 12 months.

ASIC noted that KPMG's review of a sample of client advice files shows there are some issues in the quality of records of advice and that further improvements are required in key areas such as recording the advice given, recording advice on alternative products and providing appropriate details of replacement products.

"The level of gaps in the advice files needs further improvement to allow MEL to better manage its advice risk," ASIC said.

But the regulator did not extend the EU and deputy chairman Peter Kell said to the media that this is because "we're getting everything we need from MEL and KPMG."

He said that ASIC is ready to take further action if reporting by KPMG over the coming months does not show improvement by Macquarie's advice arm.

Kell refused to reveal how many Macquarie Private Wealth (MPW) advisers are being investigated and said that ASIC is "in a critical phase on this investigation."

He added that MPW has gone through "a major cultural change" and that "KMPG has found no cases of inappropriate advice since."

While changes have been implemented, ASIC wants to see "further evidence that they are working."

Kell did not give details on the remediation program and said that MEL will be providing an update soon.

Author: Laura Millan
Source: Financial Standard

 

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