ASIC has imposed additional conditions on the Australian financial services licence of Macquarie Bank following breaches of client money provisions.
The corporate regulator said the additional conditions were imposed on Macquarie after an investigation by ASIC into a series of breach reports lodged by the bank relating to breaches of the client money provisions of the Corporations Act, between March 2004 to 2014.
The additional conditions require Macquarie to engage an ASIC-approved expert to review, assess and report on the adequacy of Macquarie's procedures for ensuring compliance with the client money requirements of the act and make recommendations for improvements.
“ASIC expects licensees to maintain strict controls and follow proper procedures in their handling of client funds,” ASIC commissioner John Price said in a statement issued today.
“Where that does not occur, ASIC will take action to ensure a licensee's ability to continue operating is contingent on its compliance with these requirements,” he said.
The breaches included failing to deposit monies into a designated client trust account and making withdrawals that were not permitted from such an account.
ASIC noted that Macquarie has filed an application for review of the decision in the Administrative Appeals Tribunal and has also sought a stay of the decision pending the outcome of the review.
ASIC provided background on the issue, highlighting that 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,” ASIC noted.
“The Corporations Act establishes a regulatory framework governing how AFS licensees must deal with client money.”
ASIC said 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.”
[Related: ANZ fined for NCCP breach]