September 29, 2018
The Westpac Bank will spend around $235 million in remediation to clients impacted by fees-for-no-services or inadequate financial advice provided by advisers within the bank’s licensees.
In a statement released to the ASX, the Bank stated its cash earning for its full year results for 2018 would be reduced by an estimated $235 million as part of its efforts to address these issues.
Specifically, Westpac listed the refunds for advice fees charged by the bank’s salaried financial planners, going back to 2008, either where services were not provided or where it could not be sufficiently verified that advice services were provided.
Additionally, the funds would be part of refunds to customers who may have received inadequate financial advice, costs for implementing the remediation processes, and costs associated with other litigation against the bank, outside of advice.
Westpac stated two thirds of the $235 million would be recorded as negative revenue and the remainder will be recorded in costs, which would not include those associated with responding to the Royal Commission.
A final figure would be provided as part of the full year results for 2018 with the bank stating that reviews of advice fees charged by Westpac advisers would continue into 2019.
Westpac Chief Executive Officer, Brian Hartzer said “It is disappointing some of our past practices have not lived up to appropriate standards. We are committed to fixing any issue identified, as well as ensuring that any customer affected has not been disadvantaged.”
Earlier this year, AMP indicated its costs related to fees-for-no-services or inadequate financial advice would pass $290 million (see: AMP Accelerates Advice Remediation Program) and ASIC stated total estimated remediation costs for the major banks and AMP would pass $850 million (see: Fee For No Service Remediation Could Pass $850 Million).