Sydney, 11 March 2016
Macquarie has applied to the Administrative Appeals Tribunal (AAT) for review of an Australian Securities and Investments Commission (ASIC) decision regarding client money. ASIC’s decision seeks to impose licence conditions on Macquarie Bank Limited (MBL). Macquarie has applied to the AAT on the basis that ASIC’s proposed conditions are duplicative of work that Macquarie has already done.
ASIC’s decision relates to client money incidents which Macquarie identified and self-reported to ASIC during 2013 and 2014. No incident 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 incidents reported included errors in atypical situations, and all were addressed with improvements to processes and controls.
Client money is a complex financial services regime, but at its core, requires financial institutions to keep clients’ money held in relation to certain financial services or products separate from an institution’s own accounts.
ASIC’s proposed licence conditions consist of an independent consultant’s review of the framework that MBL uses for the handling of client money and breach reporting procedures. Macquarie had already undertaken this in 2013 when it appointed independent professional services firm KPMG and put in place a new industry-leading client money framework. The new framework has resulted in improvements in client money handling controls.
Within the financial services industry, participants have been pressing for reform to the client money regime, including removing the ambiguity and inconsistencies created by multiple sets of client money rules. The current rules have failed to keep pace with market developments, such as the internationalisation of markets. The Australian Financial Markets Association has made submissions which highlighted a number of flaws within the current client money regime.
Addressing these matters will help achieve the key objective of securing client money.
Macquarie has requested a stay of the ASIC decision from the AAT.