media release (16-211MR)

Macquarie Bank Limited - conclusion of works undertaken by external expert

Published

Today ASIC has removed the additional conditions which were imposed by ASIC on the Australian financial services (AFS) licence of Macquarie Bank Limited (Macquarie) announced in March 2016 (for further details see 16-068MR).

In April 2016, KPMG was engaged by Macquarie to:

  1. test the effectiveness of the application of Macquarie’s Client Money Framework in Australia over the six month period ended 31 March 2016 in supporting compliance with the client money requirements and s912D of the Act; and
  2. recommend to management enhancements to the application of Macquarie’s Client Money Framework. 

KPMG has reported its findings to ASIC and Macquarie including recommendations to enhance the application of Macquarie’s Client Money Framework.

As a result of the report by KPMG, effective from today ASIC has revoked the additional conditions imposed on the AFS licence of Macquarie and Macquarie has discontinued its proceedings in the Administrative Appeals Tribunal (AAT).

Download

Summary of KPMG's key findings

Background

The additional conditions were imposed on Macquarie following an investigation by ASIC into a series of reports lodged by Macquarie concerning self-identified breaches of the client money provisions of the Corporations Act 2001 (Cth) (the Act).

The additional conditions required Macquarie to engage an independent expert, approved by ASIC, to review, assess and report on the adequacy of Macquarie's application of procedures for ensuring compliance with the client money requirements under the Act and make recommendations for improvements.

Macquarie was granted a stay of ASIC's imposition of licence conditions on 15 March 2016, pending a review by the AAT of ASIC's decision.

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 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.

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