Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Westpac's bad advice will shave A$357m off 1st-half earnings

Westpac's bad advice will shave A$357m off 1st-half cash earnings


By Jenny Ruth

May 1 (BusinessDesk) - Westpac says its first-half cash earnings will be reduced by A$357 million because of provisions to “remediate” ongoing advice service fees. However it still doesn’t know the full extent of such costs.

The Sydney-based bank is announcing these provisions in the wake of Australia's royal commission into financial services that highlighted fees being charged for poor or non-existent advice and even the charging of dead people.

Westpac will need to work out what of its advice falls into these categories, and how much it will cost to compensate customers.

Westpac says its A$510 million pre-tax provision is based on a range of accounting assumptions relating to potential payments of A$297 million before tax, A$138 million before tax in interest costs and A$75 million before tax in “remediation program costs.”

The bank says its authorised advisors “who maintain direct relationships with their customers for financial planning services” received ongoing advice service fees of about A$966 million between 2008 and 2018.

“That part of the current estimated provision which relates to potential payments represents around 31 percent of the ongoing advice service fees collected over the period which compares to 28 percent estimated for salaried planners,” Westpac says.

“Westpac will continue to work with current and prior authorised representatives and their customers to determine where a payment should be provided. The final cost of remediation will not be known until all relevant information is available and payments have been made,” it says.

“We are yet to finalise our remediation approach which may change following industry and regulator discussions.”

Westpac chief executive Brian Hartzer says it is “disappointing that we have needed to make these provisions. I said at the end of last year that our priority was to deal with any outstanding issues and process payments as quickly as possible.

“As part of our ‘get it right, put it right’ initiative, we are fixing issues and are determined to ensure that they don’t reoccur,” Hartzer says.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Marsden Pipeline Rupture: Report Calls For Supply Improvements, Backs Digger Blame

The report makes several recommendations on how the sector can better prevent, prepare for, respond to, and recover from an incident. In particular, we consider it essential that government and industry work together to put in place and regularly practise sector-wide response plans, to improve the response to any future incident… More>>

ALSO:

Oil Scare: Trump Authorises Use Of Emergency Crude Stockpile

The New Zealand dollar fell against the US dollar after President Donald Trump authorised the use of the country's emergency crude stockpile after the weekend attack on Saudi Arabia’s major oil facilities. More>>

ALSO:

Pre-Post-Brexit Deal Talks: UK Trade Minister Visits Wellington

New Zealand should get a better deal for exports of sheepmeat, beef and dairy products into the United Kingdom after Brexit, the British Minister of State for Trade, Liz Truss, said in Wellington today. More>>

ALSO:

Not-Very Well: Tamarind Halts Tui Drilling; OMV Assesses Options

Tamarind Resources has halted drilling at its Tui oil field off the Taranaki coast after the first of the three planned wells came up dry. Managing director Ian Angell says that despite the “unexpected” result from the first well, the firm believes the other two prospects are worth pursuing. More>>

ALSO:

Seeking 'Clarity': Crown To Appeal Southern Response Decision, Offers Costs

“It is our intention that the clarity that will come from the outcome of these proceedings will enable the Crown to work with Southern Response to provide a soundly based proactive solution to those people that are affected.” More>>