Response to Sydney Morning Herald articles regarding Macquarie Private Wealth published 2 August 2014

Macquarie notes The Sydney Morning Herald's (SMH's) articles published on 2 August 2014 in relation to Macquarie Private Wealth (MPW).

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 MPW misclassified a former client as sophisticated or wholesale who consequently suffered losses
• that MPW management circulated answers to competency tests

Had the SMH put these claims to Macquarie, the response would have been:

Misclassification and Client Losses

• 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 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.

Competency Tests

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.

Other Issues Raised

Macquarie 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.  MPW is also 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.

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 adviser 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.
 
MPW is primarily a retail broking and equities advice business, with over 85 per cent of assets under advice relating to equities broking activities.  Of the products on MPW's approved product list, less than four per cent are Macquarie managed funds. In addition, Macquarie Wrap is one of eight investment platforms available for advisers to recommend.

Macquarie is referring The Herald's articles to the Australian Press Council given the inaccurate, unattributed and unsubstantiated claims they contain.