Five Australian banks plan to improve their compliance systems for deposit accounts that are accessible to third parties such as financial advisers, following scrutiny by the Australian Securities & Investments Commission.
The lenders are Commonwealth Bank of Australia, Westpac Banking Corp., National Australia Bank Ltd., Bendigo & Adelaide Bank Ltd. and Macquarie Bank Group, according to an Aug. 9 release. They were chosen for the review partly as they design and promote deposit, or cash management, accounts to parties such as advisers, accountants and stockbrokers to permit them to operate on behalf of bank clients.
The regulatory review was triggered partly by the 2013 collapse of a financial planning company that owed close to A$60 million to about 400 clients. Two individuals linked to the company have also been convicted of fraudulent charges.
At the time of the investigation, which examined eight adviser-operated deposit account products, the five banks held around 455,000 deposit accounts, across 530,000 customers, worth A$28.6 billion in total.
Following the review, the lenders agreed to, among other things, make sure that account application forms explain clearly where necessary that clients are giving their financial advisers authority to operate on their account. They will also follow up with the clients with details of the authority that had been given.
The banks will also improve their monitoring of the advisers' use of the accounts, including investigating suspicious requests, as well as remediating clients who lose funds due to unauthorized transactions by their advisers.