ASIC has confirmed finalisation of the 12-month program of work agreed to by Macquarie Equities Limited (MEL) that was announced in February 2015.
During that 12-month period, KPMG was appointed to test a number of areas, including:
- testing reforms implemented under the then recently concluded Enforceable Undertaking (EU) and report back to ASIC and MEL;
- assess and report to ASIC and MEL on the sustainability of the changes made during the EU; and
- assess the quality of the advice and advice files for two separate periods during the 12-month period and report back to ASIC and MEL.
ASIC has maintained close engagement with MEL and KPMG during the 12 months.
KPMG has concluded its work and noted that, on the basis of the work performed, it believes "that the policies, procedures and processes that KPMG have assessed in the course of this engagement have been effectively designed based on the nature, scale and complexity of MEL's business and are operating effectively as designed".
KPMG further stated that based on the testing performed, and at the point in time that their work was performed, information available to them indicated that given the nature, scale and complexity of MEL’s business "the changes made by MEL under the EU Implementation Plan, including any updates or revisions made since the conclusion of the EU will be sustainable".
Based on KPMG's review of advice files, ASIC has noted an overall improvement in the quality of documentation since the EU's conclusion. KPMG did not identify any inappropriate advice, though noted areas for improvement of documentation.
KPMG has reported its findings to ASIC and MEL, including process improvement opportunities.
ASIC notes that MEL's client remediation program, implemented during the EU, is continuing.
Furthermore, ASIC's investigations into a number of former MEL advisers are continuing.
Should ASIC become aware of any new concerns about MEL, it will consider those as part its normal operations.
Background
On 13 February 2015, ASIC announced the conclusion of the two-year Enforceable Undertaking (EU) with Macquarie Equities Limited (see 15-022MR). ASIC's announcement acknowledged a significant improvement in MEL's business overall since the compliance failures that led to the EU.
At that time, ASIC announced some reforms by MEL under the EU had not yet been tested by the Independent Expert, KPMG. Furthermore, despite significant improvements in the quality of documentation on client files since the EU started, and despite the fact KPMG identified no inappropriate advice, ASIC believed MEL had to do further work to improve the quality of its advice files and consequently its ability to manage its advice risk.
ASIC and MEL therefore agreed to continued engagement over the following 12 months, during which time KPMG would:
- conduct the remaining operational effectiveness testing and report back to ASIC and MEL;
- assess and report to ASIC and MEL on the sustainability of the changes from the EU;
- assess the quality of the advice and advice files for two separate periods during the 12-month period and report back to ASIC.
Since the start of the EU, ASIC has banned three former MEL advisers, namely
ASIC's investigations into a number of former MEL advisers are continuing.