Westpac to remediate $87m to advice customers

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.

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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.

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And how on earth is BTGL going to know whether the adviser offered the corporate action to a client, and they chose to not accept it (after all BTGL's record keeping has been shown to be virtually non existent). BTGL won't care, they'll just continue to defame advises with the letters that they send to clients.

It's nearly like those at BTGL need to keep their highly paid jobs going for a bit longer...

Yes, we do!

Assuming the advisor had a conversation about it, they should have placed a file note at the very least or an ROA. No file note = compensation payable. Problem being that no one knows when the corporate actions are coming and they may come in groups making the workload spike for advisors who can’t or don’t want to keep up with the workload.

If you don't have capacity to deal with corporate actions, you shouldn't be charging clients fees to invest their money directly.

Either do it properly, or not at all.

Yes, but my point is does BTGL have the records that the adviser has. Their record keeping is crap, mine is great. I may have recommended a client do something (RoA/file note on file), but BTGL can't see that and so then compensate a client & bad mouth me for it in the process....

Without repeating the spot on conclusions DavidK has posted, let's remember that these so-called lookbacks are still one of the most bizarre undertakings the financial world has ever seen. Imagine a department you've never heard of from a large listed entity comes to your door, says they'll be taking all your client files off site to scan and assess by an unknown group of people, and if you fail the criteria of an undisclosed process you get to cough up 50% of whatever they see as restitution. Now that's without a contract, without a direct order from ASIC (they admit it's their own in house process), and without any set parameters of how this is to proceed and conclude. You the adviser breach privacy laws, Corporations Act and FASEA. I would have thought after this mess to date these companies would steer away from any repeats, but here we go again.

Spot on Duke. Lookbacks designed by the big banks and their Big4 Accounting consultant buddies. Let's not forget how poorly designed the last one was. ASIC if you are reading this, go ask Westpac if their records covered off direct fees paid, or if it only covered the fees paid via their platform... Once again lack of records...

Actually it is with a contract. The contract is called the AR Agreement or something similar. It gives the licensee the right to pillage and plunder the adviser in any way they see fit, then offer them up us a human sacrifice to ASIC via a contrived "compliance breach".

It is one of the many problems with AFSL based licensing. Advisers need to lobby hard against this model and push back against the misinformation and scare stories of dealer group heads like Rowe, Ardino, Younger and co. Wherever possible advisers should become self licensed so that they are not at the mercy of dealer groups. BTFG wasn't the first dealer group to screw over advisers, and until the law is changed there will be many others do likewise. Most dealer groups are simply using advisers for inhouse product distribution. They are NOT your "trusted business partner".

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