Macquarie Group has begun writing to clients of its Macquarie Private Wealth financial adviser network to offer compensation if they believe they are victims of poor advice.
The compensation program is a result of an enforceable undertaking that Macquarie Equities Limited entered into with the Australian Securities and Investments Commission (ASIC) in 2013, following concerns about Macquarie’s compliance processes (see: ASIC Accepts EU from Macquarie Private Wealth).
While the terms of the EU only require Macquarie to identify and remediate clients that have been affected by an adviser’s failure, Macquarie is now writing to all current and previous Macquarie Private Wealth advice clients, inviting them to raise concerns about the quality of any advice they may have received. Over 160,000 customers are expected to be contacted.
According to ASIC, clients with concerns will have their case-files reviewed by a Macquarie review committee, and those who have suffered financial loss due to bad advice will be compensated. Deloitte has been appointed as an independent expert to oversee the process.
In an approach similar to that applied by the Commonwealth Bank in its Open Advice Review program (see: CBA Apologises, Commits to Client Remediation Program), if customers are not satisfied with the initial review of their advice, they will be entitled to $5,000 to fund their own independent financial advice. If customers wish to take the matter further, the Financial Ombudsman Service has agreed to waive any time limit or monetary limit that normally applies to cases of this type, to help process complaints from Macquarie clients.
Despite stating that the regulator was pleased with the changes Macquarie had made to its management team and internal standards as a result of the EU, ASIC Deputy Chair, Peter Kell, refused to identify specific advisers or Macquarie management staff who had been investigated or dismissed from the organisation.
“ASIC has ongoing investigations into a number of former Macquarie financial advisers,” Mr Kell said. “I am unable to comment on ongoing investigations.”
The key thing is to ensure that whenever people are provided with advice that they have the opportunity to have that advice tested
However, he stated that the remuneration process for clients of advisers previously identified as having delivered inappropriate advice had already begun: “The targeting of those clients that were identified as clients of particularly problematic advisers has already commenced. The broader remediation process – the letters to the 160,000 clients – is really starting right now.
“The key thing is to ensure that whenever people are provided with advice that they have the opportunity to have that advice tested, and that they are able to get compensation if that’s warranted,” Mr Kell said.
He added that questions relating to which, if any, of Macquarie’s management staff had been sacked were best put to the wealth management organisation itself.
“We’re looking at the structural changes that have been made in the firm, in particular the way that the compliance function has been given a more prominent role… We’re looking to make sure that we get very significant changes at Macquarie in terms of how it runs its operations and to ensure standards are dramatically improved.”
The Macquarie Group issued a statement coinciding with the ASIC announcement, saying that:
- A new management team had been appointed
- Its review of all advisers was ongoing
- The implementation of the EU was on track with three out of four phases now complete
- There had been 11,500 hours in face-to-face adviser training delivered so far
ASIC has advised that while the EU noted concerns about Macquarie advisers not giving adequate consideration of personal circumstances or sufficient reasons for the advice provided to clients, none of the concerns related to life insurance advice.
