Statement regarding ABC 7.30’s coverage of Macquarie, 4 December 2015

ABC 7.30’s Stephen Long has once again omitted material facts about Macquarie Group in today’s online story, Macquarie Bank under fire after ‘get rich quick’ pitch leaves investors in debt as well as in a segment aired tonight on 7.30.

The individuals highlighted in the story were financial advice clients of Freeman Fox between 2006 and 2009. They were not financial advice clients of Macquarie. Where Macquarie acts as adviser, it takes full responsibility for that advice. Macquarie has a comprehensive remediation program in place for Macquarie advised clients. 

The Macquarie products recommended by Freeman Fox performed in accordance with their product description. The products were principal protected which means they returned the full amount of their original investment if held to maturity. Macquarie’s offering documents also specifically stated the risk, for investors who took out a loan, that they may have to continue paying interest for an investment that may only return its original amount.

Rather than having "washed its hands of investors who lost money", Macquarie worked with individual investors who experienced hardship. Hardship claims took into account the investor’s financial situation, and resolution typically involved payment plans or payment moratoriums. In addition, Macquarie was one of the only market participants to actively restructure these products in order to provide investors with the opportunity to realise future investment gains. A large percentage of Freeman Fox-advised investors benefited from this restructure. 

Privacy obligations prevent Macquarie from making any specific comment on the individuals highlighted by 7.30.

Macquarie’s full response, provided previously to 7.30 is below: 

Macquarie received applications for principal-protected investment products from investors advised by Freeman Fox between 2006 and 2009. Freeman Fox was one of a number of advisers which recommended Macquarie products.

Macquarie Equities has a client remediation program that focuses on the advice given by Macquarie and its advisers, not advice given by external third parties. Third party advisers, including Freeman Fox, are responsible for the advice that they gave their clients. Macquarie has never owned a Freeman Fox entity or business.

Freeman Fox, like other dealer groups which recommended Macquarie products, was an organisation with licences issued by the Australian Securities and Investments Commission (ASIC) to provide financial advice. The licences were in operation during the period in which Freeman Fox clients were recommended to invest in Macquarie products.

The Macquarie products Freeman Fox recommended to its clients were typically 3-5 year investments in managed funds or equity indices, chosen by the investor, which in most cases included an optional investment loan. The size of an investment application and any loan amount were decisions made entirely by the investor, as advised by Freeman Fox.

The managed funds or indices to which investors obtained exposure covered a range of highly regarded fund managers from Australia and offshore. The investments were principal protected by Macquarie, which meant that in a situation where markets fell, the investment would retain at least its original value at the end of the investment term.  

The offer documentation disclosed all the relevant risks. This included the risk, for investors who took out an investment loan, that they may have to continue paying interest on an investment that may only return its original capital amount.

At all times the products performed as the offer documents disclosed they would, including during the Global Financial Crisis (GFC) when the value of underlying investments fell dramatically, increasing the prospect that the investment would simply return the initial capital amount. 

Macquarie’s approval process for all investors, including those advised by Freeman Fox, included an assessment of information supplied by each investor regarding their individual financial circumstances. 

Following the severe market dislocation experienced during the GFC, some investors’ circumstances changed, meaning they ran into difficulties repaying the interest on their loans. Where hardship was brought to Macquarie’s attention, Macquarie actively worked with these investors to find solutions. Hardship situations were assessed on an individual basis, taking into account the investor’s financial situation, and resolution typically involved payment plans or payment moratoriums.

In addition, Macquarie was one of the only market participants to actively restructure these products in order to provide investors with the opportunity to realise future investment gains. A large percentage of Freeman Fox-advised investors benefited from this restructure.

There are no outstanding complaints by Freeman Fox-advised investors regarding these products with either Macquarie or the Financial Ombudsman Service (FOS). 

Privacy obligations prevent Macquarie from making any specific comment on the individuals highlighted by 7.30.