CommSec fined $200,000 for unauthorised transactions

Peter Terlato 16 November 2016

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ASIC continues industry-wide practices crackdown.

Commonwealth Securities Limited (CommSec), Commonwealth Bank's online trading platform, has been penalised $200,000 after entering into market transactions for a client without authorised instruction.

The Australian Securities & Investments Commission's (ASIC) Markets Disciplinary Panel (MDP) fined CommSec for not properly implementing policies designed to prevent unauthorised trading, as well as allocating market transactions to a deceased client's account without proper permissions.

ASIC reports that in March 2014, CommSec was formally notified of the death of one of its clients, who held two accounts with the stockbroking firm - an equities account and a margin loan account. CommSec failed to apply a holder record lock to either of the accounts.

Between March 2014 and October that same year, CommSec entered into 59 market transactions on behalf of the deceased client. These transactions were sought by a family member of the deceased through CommSec's online trading portal.

While the individual was authorised to trade on the margin loan account in the even of a margin call, they did not have permission to authorise any of the market transactions requested.

At the same time these transactions occurred, CommSec's deceased estate division was undergoing an internal restructure. In the process, CommSec became aware of a backlog of deceased estate work involving failures to apply holder record locks to a number of deceased accounts.

ASIC's MDP found that although CommSec had deceased estate policies and procedures in place to prevent these actions, they were not properly implemented and integrated or appropriately monitored.

In a statement on CommSec's website, managing director Paul Rayson acknowledged and regrets the process error.

"There were no losses to customers or complaints, and our processes have since been updated to ensure compliance," he said.

"We have worked collaboratively with ASIC on this matter since we self-reported the issue in 2014. Our customer and regulatory responsibilities are of paramount importance and we are committed to providing secure and convenient services to our customers."

Last week, Cash Converters was penalised $1.35 million by ASIC for failing to make reasonable inquiries as part of its small amount loans approval process, in accordance with responsible lending obligations.

Earlier this month, ASIC banned direct debit fees charged on payday loans. The new rules, which apply to any payday loan provided from 1 February 2017, came about after an independent review of lending laws.

These are the latest in a slew of industry-wide reimbursements and reparations. National Australia Bank, Commonwealth Bank of Australia, Westpac, ING and ANZ have all been fined for legislative breaches.

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