Macquarie Private Wealth has committed to lift its performance, after the corporate regulator found it failed to comply with investment standards.
The Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking from Macquarie Equities Limited (which trades as Macquarie Private Wealth) to develop and implement a risk management and compliance plan, to be overseen for the next two years by an independent expert.
The plan must address the company's failure to maintain a culture with a commitment to compliance, the effectiveness of its risk management, its compliance with various investment advice standards, adequate consideration of personal circumstances in advice to retail clients, and appropriate record keeping and supervision.
ASIC says the independent expert will report to it over the next two years on Macquarie's progress in implementing the plan.
The regulator says Macquarie Private Wealth had been ineffective in addressing a number of deficiencies identified from client files going back to 2008.
It says the deficiencies included: client files not containing statements of advice; advisers failing to demonstrate a reasonable basis for their advice; poor client record and a lack of detail in advice; lack of supporting documentation; and a failure to provide enough evidence that certain clients were sophisticated investors.
ASIC's chairman Greg Medcraft says the deficiencies were serious.
"ASIC is about ensuring investors can be confident and informed, and central to this is ensuring financial services are provided efficiently, honestly and fairly," he noted in a statement.
"Our surveillance found Macquarie Private Wealth fell significantly short of this mark, so ASIC took action.
This is a major enforceable undertaking affecting one of the wealth industry's biggest players, which we believe will rectify some serious compliance deficiencies." Macquarie says the company is committed to implementing the necessary changes at Macquarie Private Wealth to address ASIC's concerns about compliance.
"We take our obligations to regulators very seriously.
We have a strong track record of compliance practice and if concerns are raised, we work diligently to resolve them," a spokesperson said in a statement.
"Accordingly we have been working and will continue to work constructively with ASIC."