Westpac will remediate customers of its financial advice business approximately $87 million for failure to notify them of corporate actions between 2005 to 2019.
Westpac’s advice businesses involved in the remediation include Securitor Financial Group Limited, Magnitude Group Pty Ltd and Westpac Banking Corporation (known as BT Financial Advice). These businesses ceased providing personal financial advice in 2019.
The compensation would be paid to affected customers who were former clients and held ASX-listed securities through platforms.
The remediation covered an estimated 328,000 potential missed corporate action notifications, which impacted approximately 32,000 customer accounts.
Westpac aimed to compensate most of the affected customers by the end of 2021.
Customers would also be informed of missed corporate action notifications where Westpac has determined that no compensation is payable.
Corporate actions cover a range of activities by publicly listed companies, which included buy backs, renounceable and non-renounceable rights issues, share purchase plans and takeovers.
The Australian Securities and Investments Commission (ASIC) said Westpac’s failure to notify customers of corporate actions meant customers could have missed out on various opportunities.
“These include purchasing additional shares often at a discount to the market price, the creation of temporary rights or options that can be sold for a profit, and the ability to sell shares and receive a benefit that can be tax advantageous depending on the shareholder’s circumstances,” ASIC said.
Danielle Press, ASIC commissioner, said: “Compensating customers affected by misconduct is a very important part of licensees’ obligations to act fairly, honestly and efficiently.
“We are pleased to see that Westpac has taken action to remediate affected customers regardless of how much time has passed.
“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.
A spokesperson for Westpac told Money Management the bank apologises to any client of its former advice business who may be impacted by this issue and had a dedicated website with further information.
"Westpac reported this matter to ASIC in July 2019 and is remediating all impacted clients as appropriate. The group disclosed that it had provisioned for the corporate actions matter in April 2020," the spokesperson said.
ASIC encouraged all advice licensees and platform operators to consider their corporate action management arrangements and to ensure customers, who were entitled to receive notifications of corporate actions, are notified appropriately.