Westpac confirms commercial logic of advice exit
Westpac has acknowledged that because its financial advice business was a loss-maker it expects that its exit from advice and the resetting of its wealth operations will reduce costs by around $280 million a year over the remainder of this year and next year.
The big banking group used its half-year results announcement to confirm the fundamentals of its decision to exit its financial advice business via a transaction with mid-size Melbourne-based group Viridian.
It said that taken together with the organisational realignment of BT Financial Group’s businesses, with the Private Wealth, Platforms & Investments and Superannuation businesses moving into an expanded Business division and with insurance moving to an expanded Consumer division, the group had raised a provision for exit and transition costs of $190 million.
The bank’s report filed with the Australian Securities Exchange (ASX) confirmed the group booked an after-tax cost of $617 million of provisions for estimated customer refunds, payments and associated costs.
It said that in the first half, the major items included in the provisions were related to customer refunds for ongoing advice service fees associated with the group’s salaried financial planners.
“These provisions add to those in prior period and reflect an increase in the estimated proportion of instances where records of financial advice are insufficient for the purposes of remediation,” it said.
The half-year documents also confirmed a similar situation with respect to ongoing advice service fees charged by the Group’s authorised representatives that provided financial planning services under the Magnitude and Securitor brands.
Recommended for you
Unregistered managed investment scheme operator Chris Marco has been sentenced after being found guilty of 43 fraud charges, receiving the highest sentence imposed by an Australian court regarding an ASIC criminal investigation.
ASIC has cancelled the AFSL of Sydney-based Arrumar Private after it failed to comply with the conditions of its licence.
Two investment advisory research houses have announced a merger to form a combined entity under the name Delta Portfolios.
The top five licensees are demonstrating a “strong recovery” from losses in the first half of the year, and the gap is narrowing between their respective adviser numbers.
