Macquarie to appeal new conditions over handling of client money

Macquarie is appealing against new conditions imposed by the corporate watchdog over its handling of client money.

Macquarie has sought a review of ASIC’s action.

Macquarie Group is to appeal against new regulatory conditions imposed on its financial services licence over the handling of client money.

The Australian Securities and Investments Commission said an investigation had revealed Macquarie (MQG) failed to deposit moneys into a designated client trust account and made withdrawals that were not permitted from such an account between 2004 and 2014.

Client money receives statutory protection if a financial services company becomes insolvent or goes out of business.

The investigation followed reports by Macquarie relating to breaches of the client money provisions of the Corporations Act, between March 2004 and 2014.

Macquarie will have to hire an ASIC-approved expert to review, assess and report on the adequacy of the bank’s procedures for ensuring compliance with the client money requirements of the Act, and make recommendations for improvements.

ASIC Commissioner John Price said: “ASIC expects licensees to maintain strict controls and follow proper procedures in their handling of client funds. Where that does not occur, ASIC will take action to ensure a licensee’s ability to continue operating is contingent on its compliance with these requirements.”

Macquarie has filed an application for review of the decision in the Administrative Appeals Tribunal and has also sought a stay of the decision pending the outcome of the review.

Macquarie said it has already appointed independent professional services firm KPMG and put in place a new industry-leading client money framework. The new framework had resulted in improvements in client money handling controls, it said.

The bank said not only were ASIC’s proposed conditions duplicative of work it had already done, no incident had resulted in a loss to any client.

“Macquarie treats client money with the utmost seriousness and in self-reporting these incidents to ASIC, took a conservative and consultative approach,” the bank said. “The incidents reported included errors in atypical situations, and all were addressed with improvements to processes and controls.”