Morgans all the wiser for ASIC act

Stockbroking firm Morgans has taken away key learnings after the corporate regulator lifted tougher licence conditions.

Morgans chairman Brian Sheahan and managing director John Clifford in Brisbane. Picture: Glenn Hunt/The Australian

Stockbroking and financial planning firm Morgans has improved its technology and taken away key learnings after the corporate regulator lifted tougher licence conditions imposed for governance and compliance shortcomings.

Morgans’ executive chairman Brian Sheahan said it had been a positive and a negative to have the conditions imposed.

“That has been quite valuable,” Mr Sheahan said.

He added that as a result of the process, Morgans had started a number of significant projects, including centralising and improving monitoring and compliance processes and implementing new data systems.

ASIC hit Morgans with stricter licence conditions in 2015 and 2016 after uncovering “serious breach incidents” and a raft of problems at the broker including deficient internal controls. ASIC raised concerns around the way Morgans handled confidential market-sensitive information, staff trading and conflicts of interest in corporate transactions.

In a statement on Friday, the regulator said it was satisfied with a final review of changes in six areas of Morgans’ business by consultancy group Compliance One. The report outlined that Morgans had hired additional compliance staff in most states, provided more training on general and personal advice distinctions and the operation of Chinese walls and had introduced stricter account opening controls.

“The consultant found that Morgans has adequately designed and implemented responses to recommendations,” ASIC said, noting the removal of the licence conditions.

Listed stockbroker Bell Financial has also had issues with the regulator, including for suspect trading relating to DirectMoney.

Bell, Macquarie Group and UBS Wealth Management are among stockbroking firms hit with enforceable undertakings for compliance issues.

Brisbane-based Morgans has 500 authorised representatives and 950 employees.

Managing director John Clifford said while he was now “very comfortable” with Morgans’ compliance systems but would oversee continued improvement.

Last year’s Hayne royal commission damaged the broader financial services sector with revelations of shoddy advice. It has renewed focus on company interaction with customers and managing risks.

Mr Clifford said Morgans was adamant stockbroking and planning could work under the one company. Morgans is wholly owned by staff and shareholders.

The stockbroking industry is grappling with pressure on margins and a weak market for initial public offerings this year.

“Our pipeline isn’t overflowing but there are some good companies that are there in the mix,” Mr Clifford said.

Morgans is jointly managing the ASX listing of Perpetual’s new trust this year and in 2018 worked on floats including that of electronics firm Atomos and dental group Smiles Inclusive. Atomos stock has more than tripled since its debut while Smiles has fallen sharply.