Westpac has admitted it did not fully appreciate the underlying risks in running a financial planning business.
The banking group’s chairman, Lindsay Maxsted used his address to the company’s annual general meeting in Perth to include the lack of understanding of the risks inherent in financial planning as being one of the key lessons Westpac had taken from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
While also listing the bank’s failure to understand and analyse customer complaints and to focus on non-financial risks, Maxsted said: “We did not fully appreciate the underlying risks in the financial planning business”.
“Better training and supervision, changes to the way financial planners were remunerated, and better documentation of advice was required,” he said.
“Needless to say, we have moved to shore up the resources, systems and related reporting to deal with any shortcomings,” Maxsted said. “We are accelerating customer remediation, recognising that where we have made mistakes, we need to promptly fix these issues for customers.”
Maxsted’s comments to the Westpac AGM came as the company’s chief executive, Brian Hartzer sought to paint a positive picture with respect to BT Financial Group which he said that, when remediation provisions were excluded, had experienced only a one per cent decline in profit.
However, Hartzer acknowledged that the bank’s overall results had been impacted “by significant regulatory and remediation costs, with substantial provisions for customer refunds and additional operational cost as we worked through the Royal Commission, various regulatory enquiries and remediation."