ASIC has announced that it has accepted an enforceable undertaking (EU) from Macquarie Equities Limited (MEL) which carries on a large financial product advice business under the name Macquarie Private Wealth (MPW). MEL has agreed to a review of its Macquarie Private Wealth business, including its licence risk and operating model and systems and its legal and regulatory obligations. The EU followed an ASIC surveillance started in December 2011, which reviewed MEL’s compliance systems and a significant number of client files.
The publication of the EU gives an insight into ASIC’s expectation of compliance risk management by AFSL Licencees.
ASIC found MEL had failed to address recurring compliance deficiencies that involved a significant number of its financial advisers. These deficiencies were initially identified by MEL’s own client file reviews dating back to 2008.
ASIC’s review found these deficiencies, which were not reported to ASIC, to be serious and that any remediation initiatives attempted by MEL over a four year period had been ineffective.
Comment
The most interesting aspect of the Enforceable Undertaking given by MPW is how MPW set up its compliance framework: how it monitored compliance and what it did about breaches.
MPW found wide-spread compliance breaches in its own reviews. The problem was its response. It did not report them under section 912D Corporations Act. They did not fix all of them.
MEL has now agreed to change its compliance reporting framework so that:
- compliance staff no longer report to MPW management but instead report to the group-wide compliance team;
- MPW’s compliance policies, procedures and systems are integrated into group-wide compiance systems.
The EU emphasises record keeping and monitoring and supervision of representatives as a key part of risk management.
MEL will conduct a Licencee Risk Framework review in accordance with As/NZA ISO 31000-2009.
