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Macquarie Group to compensate potentially thousands of customers caught up in financial advice scandal

Macquarie Group to compensate potentially thousands of customers caught up in financial advice scandal
Macquarie Bank is preparing to compensate potentially thousands of customers caught up in a financial advice scandal.

The corporate regulator, the Australian Securities and Investments Commission (ASIC), has ordered the investment bank to contact 160,000 clients who may have lost money as a result of poor advice.

It comes six weeks after the Commonwealth Bank began a compensation program for the victims of its multi-million-dollar fraud involving some of its financial planners.

Like the Commonwealth Bank scandal, the allegations against Macquarie follow complaints from clients who discovered their money had been placed into high-risk investments without their consent resulting in losses of, in some cases, millions of dollars.

At a press conference this morning, ASIC deputy chairman Peter Kell was forced to explain why Macquarie had yet to reveal details of its compensation package, a full 18 months after the regulator finalised an investigation into the investment bank's failings.

As a result of that investigation, Macquarie gave a series of "enforceable undertakings" and the bank claims it has spent $50 million training staff, replacing managers and raising standards.

But there is still no clarity about the number of victims or the level of compensation paid out to them.

In answer to a question from the ABC as to why compensation was not the first stage of enforceable undertaking, Mr Kell said the regulator wanted to make sure there was "adequate understanding of who was affected".

ASIC was the subject of a stinging rebuke by a Senate inquiry just six weeks ago over its failure to investigate complaints from aggrieved Commonwealth Bank customers and its reluctance to take any meaningful action on compensation.

Mr Kell's comments this morning appeared to be at odds with Macquarie's chief executive Nicholas Moore, who at the end of July said the bank already had contacted customers and that remediation already had begun.

"The targeting of those clients that were identified as clients of particularly problematic advisors has already commenced," Mr Kell said.

"The broader remediation process related to the 160,000 clients is really starting right now and that's the entire framework for the remediation process."

While Mr Kell said ASIC wanted to ensure all affected clients were treated equally and that all dodgy advisers were exposed, he stopped short of accusing Macquarie of any failings in the process.

"I think you can take it as a given that ASIC wanted to ensure that as broad a range of the client base as possible was covered through the remediation process," he said.

"We've been working constructively on this with Macquarie but we wanted to make sure that everyone had their opportunity to reconsider the advice."

Author: Pat McGrath
Source: ABC 7 News


Last modified onMonday, 18 August 2014 03:28

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