Enforceable undertaking by the Australian Securities and Investment Commission (ASIC)
On 29 January 2013, ASIC accepted an enforceable undertaking from Macquarie Equities Ltd (“Macquarie”) after it came to light that there were recurring instances of compliance failures by Macquarie and its financial advisers, as well as a general failure by Macquarie to properly supervise its advisers in relation to the advice provided to clients.
We can advise you about your rights in relation to this enforceable undertaking, and if you are one of those affected by the undertaking, Macquarie will usually pay for the initial costs of that advice.
A copy of the enforceable undertaking is available here . A copy of ASIC’s press release in relation to the undertaking is available here. The failures in question included:-
- Statements of advice given by advisers to clients not being properly stored on the relevant client’s file;
- Advisers not having, or not being able to demonstrate, a reasonable basis for the advice given to clients;
- Lack of supporting documentation demonstrating a reasonable basis for the advice given;
- Poor maintenance of client records;
- Statements of advice lacking the required level of detail;
- Failing to properly establish whether clients were “sophisticated investors” (a term given a specific meaning by section 761GA of the Corporations Act 2001 (Cth))
ASIC found these breaches to be serious, that they had not been properly reported to ASIC, and that attempts by Macquarie (if any) to make good these breaches had been ineffective.
By way of practical example, some instances of the above failures have resulted in clients being provided with Statements of Advice containing the following kinds of issues:-
- Incorrectly assessing a client’s risk profile (i.e. a retiree with no appetite for risk, and only very low income-draw requirements being assessed as a “High Growth” investor with a high appetite for risk and high desire for capital growth); and
- Recommending an investment portfolio which did not match the client’s assessed risk profile (i.e. assessing a client’s risk profile as “Conservative” but subsequently recommending high risk investments), including instances where the risk profile had already been incorrectly assessed and the recommended investment portfolio exacerbated that problem.
These failures appear to go as far back as 2007, though there may be even earlier examples.
The enforceable undertaking requires Macquarie to, amongst other things, write to clients affected by these failures, and to remedy the situation as appropriate. In these circumstances, Macquarie will usually undertake an initial review of the affected client’s file, and if they consider that the client was adversely affected, make some offer of compensation.
Even if Macquarie makes no offer of compensation, they will usually still invite you to obtain legal advice to consider their position, and offer to pay for the initial costs involved in doing so.
Accordingly, if you have received a letter from Macquarie in relation to a review of your investment with them, or consider that you may have been adversely affected by these failures, please contact Daniel Davey, a partner of our firm, and an accredited specialist in commercial litigation with experience dealing with Macquarie on behalf of clients who have been adversely affected by the matters the subject of the enforceable undertaking, and who has previously advised clients in relation to these issues.
07 3210 3540
Accredited Specialist Commercial Litigation