Westpac to pay $87 million in compensation to poorly informed customers
Westpac will pay around $87 million in compensation to about 32,000 customers whose financial advisers failed to notify them of market-sensitive information about their shareholdings over a fourteen-year period.
The Australian Securities and Investments Commission found the bank’s advisers had withheld an estimated 328,000 pieces of important information on corporate actions by ASX-listed companies such as share buybacks, share purchase plans and takeover offers. ASIC said Westpac’s failure to properly inform customers caused them to miss out on potentially lucrative opportunities.
Westpac will pay customers around $87 million after its financial advisers failed to properly inform them of market opportunities. Credit:Will Willitts
These opportunities included buying additional shares at a discount to the market price, the creation of temporary rights or options that could be sold for a profit and the ability to sell shares for a tax advantage, the regulator explained.
The breaches were self-reported to ASIC in July 2019 and occurred between 2005 and 2019. The regulator is now calling on anyone who is concerned they might be affected to contact Westpac, which will determine on a case-by-case basis how much compensation is required.
Westpac’s advice businesses involved in the remediation program include Securitor Financial Group Limited, Magnitude Group Pty Ltd and Westpac Banking Corporation, which is known as BT Financial Advice. These businesses ceased providing personal financial advice in 2019.
ASIC Commissioner Danielle Press said compensating customers affected by misconduct is an important part of a licensee’s obligations to “act fairly, honestly and efficiently”.
“We encourage affected customers to engage with the communications from Westpac to understand how they were impacted and to seek further information from Westpac if required,” Ms Press said.
Major financial institutions, including the big four banks, have undergone long-running remediation programs after systemic misconduct was exposed by the financial regulators or during the Hayne royal banking commission.
KPMG’s half-yearly banking report, released in May, said remediation charges remained a prominent theme, with $5.3 billion in expenses and repayments to customers made over a 12-month period.
“It is expected that continued remediation expenditure is necessary,” KPMG found.
In April last year, Westpac disclosed it expected to spend around $130 million in compensation to customers using its platforms (in most cases BT Wrap) who were not advised of information that caused them to miss out on value.
Evans and Partners banking analyst Matt Wilson said there was at least another 12 to 18 months left for the banks to complete their remediation programs, and costs could still blow out.
“The key will be whether or not they’ve made any mistakes with the remediation, given they tried to rush it through, there would be some overs and unders they may have exposed themselves to,” Mr Wilson explained. He said the remediation programs have been going on for “longer and bigger than anyone could have thought”
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