Former ARs add to Westpac’s remediation challenge
Less than a week after announcing the sale of is financial planning business to Viridian Advisory, Westpac has admitted it is still a long way from determining precisely how much it will need to provision for advice remediation.
In an announcement to the Australian Securities Exchange (ASX) today, Westpac said that its cash earnings in the first half of this financial year would be reduced by an estimated $260 million due to provisions arising from further work on its customer remediation programs.
However, it said this provisioning excluded any allowance for refunds to customers of authorised representatives (Ars) in relation to ongoing advice services fees which were still being determined.
The ASX announcement said that of the estimated $260 million impact on cash earnings, approximately 90 per cent related to issues identified in previous financial years and that about half of the provisions related to the financial advice business while the remainder related to business and consumer banking.
It said the key remediation items included customer refunds associated with certain ongoing advice service fees charged by the group’s salaried financial planners and that the additional provisions reflected an increase in the estimated proportion of instances where records of financial advice were insufficient for the purposes of remediation.
The bank said it was focused on making refunds to customers as soon as possible and would commence remediation in the second half for customers of Ars still operating under BT Financial Group’s licences.
“Work is also underway to determine the extent of the services provided by authorised representatives who are no longer operating under BTFG’s licences, including those who have left the industry,” it said.
“This remediation program is more challenging, including because many of the AR’s files have been difficult to access,” the announcement said.
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