Macquarie Bank CEO Stuart Green
Macquarie Bank has been fined for failing to have effective controls on customer cash management accounts to detect and prevent unauthorised fee transactions conducted by third parties.
The Federal Court ordered Macquarie to pay A$10 million, after it found that a financial adviser, Ross Hopkins, made 167 unauthorised transactions on 13 of his client’s Macquarie CMAs via Macquarie’s bulk transaction system.
Hopkins withdrew a total of $2.9 million. After an investigation, he was permanently banned from providing financial services and sentenced to six years in jail.
The unauthorised withdrawals occurred between October 2016 and October 2019. Macquarie initially defended proceedings brought by ASIC but later admitted that it failed to do all things necessary during that period to ensure that its services were provided efficiently, honestly and fairly.
Macquarie allowed its customers to give third parties, such as financial planners, stockbrokers and accountants, authority to transact on their accounts. This included a limited authority to withdraw fees.
It provided third parties with a bulk transacting tool, allowing them to make multiple withdrawals from multiple customer accounts at the same time.
The court found that between 2016 and 2020, Macquarie failed to implement effective controls to monitor whether third party bulk transactions under the fee authority were actually for fees.
ASIC chair Joe Longo said in a statement: “Fraud controls are increasingly important. ASIC expects financial institutions to prioritise and invest in systems that protect their customers.”
He said Macquarie has implemented effective controls since 2020.