Macquarie Equities Limited (MEL) will spend a further 12 months under the watchful gaze of ASIC and KPMG after the completion of its enforceable undertaking on 29 January this year.
ASIC accepted the EU from MEL in January 2013, following surveillance work by the regulator.
Addressing the media on Friday, ASIC deputy chairman Peter Kell said the EU was a result of “major surveillance we undertook [that] found systemic and recurring compliance deficiencies in the business”.
The regulator has been receiving regular reports on the progress of the EU prepared by the independent expert, KPMG.
“All of the reforms agreed to under the EU have been implemented and there has been significant and important improvement at MEL since ASIC identified the concerns back in 2012/2013,” Mr Kell said.
At the same time, Mr Kell announced an “additional 12-month program of work” to test the compliance reforms that have been implemented within MEL.
The further work will require MEL to continue to engage KPMG as an independent expert, he said.
MEL will also be required to continue reassessing client advice files going back to 2004, Mr Kell said.
“The client compensation process is still underway under the oversight of another independent expert – Deloitte,” he said.
An announcement from MEL about the state of the compensation process is expected soon, he added.
ASIC is also conducting its own investigations in MEL financial planners – something Mr Kell was reluctant to comment on.
Despite the ongoing work required, Mr Kell recognised there have been “major improvements to the [MEL] business”.
“There has been a major restructuring of MEL. There is new senior management, including the creation of new compliance positions,” he said.
“Around a quarter of the advisers in the firm have left, as well a range of staff from the original compliance area.
In addition, the compliance team no longer reports to the Macquarie Private Wealth executive team, he said.
“A range of improvements across the board mean the ability of the business to identify, act on and remedy risks and breaches has improved significantly,” Mr Kell said.
“The resources devoted to compliance have been increased significantly and adviser training has been very sub-revised."
Mr Kell downplayed the significance of the infamous ‘Penske File’ – a document that was allegedly passed around the Macquarie offices to allow financial planners to cheat on their continuing professional development exams.
“There is no file, let me assure you, with big red letters written on it or anything like that,” he said.
“In itself, it was only one part of a wider set of evidence that we came across that indicated MEL was significantly deficient in this area [education] and major reforms were going to be needed in how the training and education processes were undertaken.
“That was explicitly included in the EU and as a result there have been more than 12,000 hours of additional training introduced to assure that [continuing professional development exams] cannot be gamed in the future.
“There will be no ‘Penske Files’ in the future,” Mr Kell said.
Author: Tim Stewart
Source: Investor Daily
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