A recent Senate inquiry into unethical financial planning practices at the Commonwealth Bank of Australia (“CBA”) has revealed that Macquarie Bank’s financial planning arm, Macquarie Private Wealth also, has widespread failings in respect of its financial planning practices, as well.(1.)
The Senate inquiry released a review of Macquarie Private Wealth, which highlighted extremely poor record keeping, failings to report breaches of the law, an ingrained culture of dishonestly and cheating on professional development exams, and the provision of negligent financial planning advice to its clients. The inquiry found that Macquarie Private Wealth’s advisers may have been wrongly classifying ordinary customers as ‘sophisticated’ or ‘wholesale’ investors in order to circumvent extra regulatory requirements and paperwork, and to sell ordinary customers riskier and more complex investments, many of them Macquarie-related, which pay the advisers higher fees and commissions.In response to the review, the Australian Securities and Investments Commission (“ASIC”) ordered the Macquarie Group to contact every current and former client of its Macquarie Private Wealth division and invite them to raise concerns about the quality of advice they received. The Macquarie Group will then review past advice and if problems are found, Macquarie will provide these clients with compensation. It is estimated that the mail-out will reach more than 160,000 clients.This is in addition to the 400,000 current and former customers of Commonwealth Bank, who have also been invited to participate in a ‘review program’ after potentially receiving bad advice. Commentators have warned, however, that Macquarie’s remediation scheme may be flawed and clients may not receive adequate compensation. Specifically, numerous procedural questions remain unanswered, there is no time limit on the review process, and Macquarie’s compensation scheme only reimburses clients for their costs after Macquarie has made its review decision.
There are also grave concerns about the ability and independence of Macquarie Bank, a corporation with vested interests, to genuinely offer compensation when it is in charge of the entire review process.If you believe you (or anyone else you know) may have received financial advice from the Macquarie Private Wealth (or any financial service provider for that matter), do not hesitate to contact us to speak to Jacob Carswell-Doherty or Sarah Hendry.
1.The Senate, Economics Reference Committee, “Performance of the Australian Securities and Investments Commission”, June 2014 available electronically via: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/ASIC/Final_Report/~/media/Committees/Senate/committee/economics_ctte/ASIC/Final_Report/report.pdf
