A newspaper article making claims about wealth management conduct has prompted Macquarie to lodge a complaint with an Australian media watchdog.

Australian bank Macquarie is filing a complaint with the country’s media watchdog over “inaccurate, unattributed and unsubstantiated claims” by the Sydney Morning Herald that some of its wealth manager advisors cheated on competency exams and put clients into high-risk products.

The bank has issued a sharply-worded response to an article by the SMH that was published on 2 August. A day later, the bank said: “Although Macquarie received a list of 45 questions from the SMH (the response to which was sent to the relevant reporter and published on our website here) the SMH omitted from the list its two central claims against MPW.  These were that that MPW misclassified a former client as sophisticated or wholesale who consequently suffered losses; and that MPW management circulated answers to competency tests.” (The client in question hasn’t been named.)

The bank said that regarding the claims of misclassification and client losses, the bank’s position is that “the former client was always treated as a retail client and was provided with detailed and comprehensive statements of advice. This was notwithstanding that the client was a qualified accountant with experience in a number of senior executive roles including as chief financial officer and despite the client providing an accountant's certificate which entitled him to be treated as a sophisticated or wholesale investor (relating to several years)”.

“There is no record that the client gave 'explicit instructions that he did not want currency exposure' in his investments.  Indeed, in the comprehensive statements of advice that the client was provided with in 2005 and 2009, it was specifically noted that the portfolio had international exposure. The client acknowledged that he had read and accepted the relevant statements of advice,” the bank continued.

Macquarie went on: “The review of the client’s files also showed a Statement of Advice that outlined that gearing increased the potential for capital losses and that MPW was not comfortable in implementing a gearing strategy on the client’s behalf as he was retired.  Extensive disclosure of the potential risks of gearing was made in that Statement of Advice.  However, according to the Statement of Advice signed by the client, he requested the gearing strategy, acknowledging at the time his extensive market experience and understanding of the risks.”

Regarding competence of managers, the bank said: “With regard to the unattributed claims made about circulation of answers to competency examinations by management, Macquarie has examined the claim and found no evidence of it.”

Macquarie said it has already put on the public record that a review of client files and client classification is ongoing and that client remediation, which follows the Financial Ombudsman Service principles, is subject to oversight by Deloitte and ASIC. “This is open to any of the clients who have raised outstanding concerns as mentioned in the SMH article,” the bank said.

The bank said it is contacting all clients to ensure they have the opportunity to raise concerns. “Given that this is an ongoing process, the SMH's unattributed claim that `some estimate the losses’ by MPW clients `could be many tens of millions of dollars’ is without any factual basis,” it said.

“The SMH's claim that Macquarie wrongly sent letters to clients is also without foundation.  In all instances where letters have been sent to clients, an MPW advisor is believed to have acted on the account, even if client activity was minimal.  This reflects the thorough approach that MPW has taken with client communication on this matter,” it said.
The bank added that it is referring the SMH’s articles to the Australian Press Council.

Newspaper claims
In its article, the SMH had written that “some financial advisors at Australia’s Macquarie Group have cheated on competency exams by using a document circulated by management known as the ‘‘Penske File’’. The publication said Macquarie’s financial advice division, Macquarie Private Wealth, may have incorrectly put hundreds, if not thousands, of clients into a high-risk category that exposes them to exotic and dangerous financial products.

Losses from poor advice at Macquarie, one of Australia’s biggest planning groups, could run into the tens of millions, the report claimed.

The Penske File, named after a folder of documents featured on 90s sitcom Seinfeld, contained answers to continuing professional development examinations that advisers are required to take annually in order to keep their professional accreditation up to date, the publication said.

The report claimed that “Macquarie did not directly answer 45 questions put by Fairfax Media, including questions about the Penske File, but said it had introduced new `external compliance training’”.