Macquarie Investment Management Limited (Macquarie) is due to refund over $5.5 million to around 2,300 clients affected by system errors. The errors occurred between 2001 and 2014, on a number of products using the Macquarie Wrap Platform. ASIC has been working with Macquarie to resolve this matter in the interest of clients.
The system errors included:
- failing to apply sufficient tax credits to the GST portion of client fees
- charging administration fees which exceeded the maximum disclosed in the product offering documents.
In discussion with ASIC, Macquarie appointed Deloitte as an independent third party consultant to assess the controls and processes around Macquarie’s remediation and compensation arrangements to ensure that:
- all affected clients are identified and appropriately compensated
- Macquarie's controls and processesare adequate to prevent a similar error occurring in future.
Deloitte’s review identified a third error, relating to the administration fee in an offering document.
All three errors have now been rectified and Macquarie will commence compensation (including all interest due) to clients from 17 June 2015 onwards. Clients who exited affected products more than 12 months ago will be contacted by Macquarie to discuss refund arrangements.
Commissioner Greg Tanzer said, 'We welcome the reporting of large system errors to ASIC. Where errors do occur, entities must identify and appropriately rectify them as soon as possible.’
'ASIC will work with entities who report issues to us to ensure consumers are compensated in a timely, effective way'.
ASIC acknowledges the cooperative approach taken by Macquarie in this matter.
Background
The Macquarie Wrap Platform has investor directed portfolio services (IDPS) and superannuation funds that link a number of investments held by clients and provide consolidated custody, administration and reporting to clients.
Macquarie as operator of the Macquarie Wrap Platform reported to ASIC two administration fee errors relating to a number of white labelled[1] Wrap Super and Pension and Wrap IDPS products.
Some accounts from the following issuers are affected:
| Macquarie Equities Ltd | Premium Portfolio Service Investment Account, the Premium Portfolio Service Super and Pension Account, the Strategic Wealth Management Premium Portfolio Service Investment Account |
| Commonwealth Securities Ltd | Premium Portfolio Solution Investment Account, and Premium Portfolio Solution Super and Pension Account |
| Commonwealth Private Ltd | Private Portfolio Solution Investment Account, and Private Portfolio Solution Super and Pension Account |
| Perks Wealth Management Pty Ltd | Perks Investment Manager, and Perks Super and Pension Manager |
| Optimus Financial Pty Ltd | Optimus Investment Manager |
| FuturePlus Financial Services Pty Ltd | FuturePlus Wrap Investment Manager |
| Capital Partners Consulting Pty Ltd | Assante Custodial and Administration Service and Assante Super and Pension Service |
| Symes Warne and Associates Ltd | Gateway Super and Pension Service |
This compensation outcome follows other developments and outcomes involving client refunds as a result of system errors:
- NAB Wealth to refund customers after review of system error. (Refer: 14-093MR)
- BT to refund customers after review of fees disclosed and charged. (Refer: 13-159MR)
- BoQ to refund customers after system error. (Refer: 13-070MR)
- ASIC works with the Rock Building Society to correct charging errors. (Refer: 10-267AD)
Note [1]: White labelling is an arrangement where a product provider (in this case, Macquarie as a platform operator) enters into a contractual arrangement with a third party (in this case, the above issuers), which will allow the third party to use the product provider’s product but rebranded or badged under the third party’s own name. White labelling of platforms is not an uncommon practice in the asset management industry.