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Thursday 17 March 2016

16-068MR ASIC imposes additional licence conditions on Macquarie Bank

ASIC has imposed additional conditions on the Australian financial services (AFS) licence of Macquarie Bank Limited (Macquarie).

The additional conditions were imposed on Macquarie following an investigation by ASIC into a series of breach reports lodged by Macquarie relating to breaches of the client money provisions of the Corporations Act, between March 2004 to 2014.

The additional conditions require Macquarie to engage an expert, approved by ASIC, to review, assess and report on the adequacy of Macquarie'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'.

The breaches reported by Macquarie raised issues including:

  • failing to deposit monies into a designated client trust account; and
  • making withdrawals that were not permitted from such an account.

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.

Background

Client money is money paid by investors to an AFS licensee in connection with a financial product or the provision of a financial service. Client money held in a compliant account receives statutory protection in the event of the issuer’s insolvency or ceasing to carry on business.

The Corporations Act establishes a regulatory framework governing how AFS licensees must deal with client money. The objective of these requirements is to ensure that money received by a licensee on behalf of a client relating to the provision of a financial service or product is handled in an appropriate manner by the licensee. The requirements therefore specify such details as the types of accounts into which client money can be deposited; how money can be invested; and the circumstances under which the licensee may withdraw money from the account.

The additional conditions have been imposed on AFS licence 237502.

Download:

Macquarie Bank Limited: Additional AFS licence conditions

Editor's Note 1:

On 10 March 2016, Macquarie lodged an application for review of ASIC's decision to impose Conditions 5 to 11 on its AFS licence with the AAT. Macquarie also sought a stay of ASIC's decision until the determination of its application for review by the AAT (Stay Application). On 15 March 2016, the AAT granted the Stay Application. Therefore Macquarie is not required to comply with Conditions 5 to 11 of its AFS licence until the determination of its application for review by the AAT.

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Last updated: 23/03/2016 03:04