THE corporate regulator has slammed Australia’s financial planning industry for shonky standards as a scandal involving Macquarie Group widened.

Macquarie, the so-called “millionaires factory” investment bank, was ordered by the Australian Securities and Investments Commission (ASIC) on Friday to invite 160,000 past and present clients to seek compensation.

The scandal involves misconduct and flawed financial advice given by its planners to clients causing heavy losses dating back to 2004 — when the bank first obtained a financial services licence.

One claim involves a document called the “Penske File” — taken from TV hit Seinfeld — and containing answers to compulsory professional development exams so Macquarie advisers could cheat. The industry is facing a crisis of confidence after Australia’s largest bank CBA had its own recent scandal, with more than 1,100 customers losing savings due to rogue advisers.

Macquarie’s advisers’ alleged misconduct includes deliberately labelling people as sophisticated-wholesale investors so their money could be invested in risky products without the protection given to retail investors.

At the heart of the bank’s problems were its poor record keeping with a lack of information about customers, ASIC deputy chairman Peter Kell said.

“Unfortunately we see problems in a range of (financial planning) firms and we’ve seen them over some time,” he told reporters.

“This is an industry that has to lift its game, this is an industry that has to put customers back at the centre of their business models.

“It really has to change.” ASIC instructed Macquarie to write the letters to every customer they have ever had offering possible remediation, 18 months since it gave an enforceable undertaking (EU) to deal with the problem. Mr Kell defended that time frame and ASIC’s role, which came under scrutiny in a recent Senate inquiry because of its slow response to whistleblowers in the CBA scandal.

ASIC had been raising the alarm bell about the financial planning industry for years and the EU was a significant expensive imposition on Macquarie, he said.

The Future of Financial Advice (FOFA) reforms aimed at restoring trust from the community were heavily influenced by ASIC, he said. Macquarie would not comment on Friday other than to refer to last month’s statement at its AGM.

It cited management changes and spending $49 million improving compliance and adding 11,500 hours of adviser training to comply with ASIC and implement FOFA reforms.

Concerns were raised about the fact that Macquarie clients must contact the bank about remediation, because it is in charge of the process with ASIC’s oversight.

Key class action law firm Maurice Blackburn’s financial disputes head John Berrill said the process was flawed with no detail given about whether clients would be given all of the information on their files.