Westpac has acknowledged it did not fully appreciate the risks in its financial planning business leading to the situation which was revealed by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Westpac chairman, Lindsay Maxsted has used the company’s annual report to state that better training and supervision, changes to the way financial planners were remunerated and/or better documentation of advice provided was required.
“Needless to say, having identified the above points, your board and management team have moved quickly to shore up the resources, systems and related reporting to deal with any shortcomings,” he said.
“Some of the improvements cannot happen overnight, particularly when technology systems need to change, but in these cases, our monitoring of the risks has been heightened and extra steps have been put in place,” the chairman said.
He said the bank was also accelerating customer remediation, recognising that where Westpac had made mistakes it needed to promptly take steps to fix the issues.
Elsewhere in his annual report letter, Maxsted said some employee remuneration arrangements had inadvertently contributed to poor behaviour and that while remuneration was not directly related to all the bank’s conduct failures in some cases remuneration had been poorly designed “and the payment of commissions or the existence of other short-term incentives linked to sales may have resulted in poor behaviour”.