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

 

Oil Exploration: Chevron, Equinor Depart NZ

Chevron and Norwegian oil giant Equinor have opted to abandon their joint exploration efforts off the east coast of the North Island... Chevron said the decision not to proceed with the next five-year stage of their work programmes was based on the firms’ broader portfolio considerations and not “policy or regulatory concerns.” More>>

ALSO:

Reference Group Proposal: Motorists, MTI Support Ban On Less Safe Car Imports

A proposal to ban some used car models from being imported into New Zealand is being welcomed by the Motor Industry Association, which says Japan's scraps are being sent here for waste disposal. More>>

ALSO:

Gordon Campbell: On Asking The Banks To Be Nicer To Farmers

Few would begrudge the idea that banks should be made to act more humanely – given the obscene profits that the Aussie banks are extracting annually from New Zealand, they can surely afford to cut some slack. More>>

ALSO:

Wider Net Ban, Other Threats: Plan To Expand Protection For Maui And Hector’s Dolphins

The Government is taking action to expand and strengthen the protection for Māui and Hector’s dolphins with an updated plan to deal with threats to these native marine mammals. More>>

ALSO: