SYDNEY, Nov 22 (Reuters) - The CEO of Macquarie Group Ltd glided through an appearance at an inquiry into misconduct in Australia’s financial sector on Thursday, as the country’s largest investment bank has not been the subject of any allegations.
The Royal Commission inquiry has shocked the country since hearings began in February with accusations of fee-gouging and board-level deception, wiping billions of dollars from the market capitalisation of many firms.
The inquiry has focused mainly retail banking, and in contrast to the heads of Commonwealth Bank of Australia , who spent three days testifying, Macquarie CEO Nicholas Moore took just an hour.
Due to retire next week after a decade as CEO, Moore told the inquiry that Macquarie executives earlier had mis-read changes in the stockbroking industry during a switch in focus to wealth management, but action had been taken several years ago to fix those shortcomings.
“There was failure of recognition, of management, of the situation that we faced,” Moore said.
Macquarie Equities agreed to a legally binding undertaking for the corporate regulator in 2013, after a review found poor compliance by its advisers dating back to 2008.
And the inquiry was told that an independent review by KPMG in 2016 found the subsidiary was fully compliant.
Although the focus of the inquiry lay elsewhere, there was still considerable interest in Moore’s appearance as Sydney-based Macquarie is often referred to as the “millionaires’ factory” because of its high executive salaries.
During questioning, Moore argued against banning commissions for mortgage brokers and replacing them with a flat fee - a measure to remove incentives to sell inappropriate products - because customers would be unlikely to use brokers if the cost of a mortgage was increased by the fee.
“We are dependent upon this broker network for our business,” Moore told the inquiry. “Our nervousness would be (that) regulation could severely hamper that broker business.”
Macquarie Bank uses mortgage brokers for about 90 percent of its home loans, Moore said.
The inquiry continues. (Reporting by Paulina Duran; Editing by Byron Kaye and Simon Cameron-Moore)