Westpac has announced it will be reducing its cash earnings in 2018 by $235 million to address customer issues relating to its financial advice, including ‘fees for no service’.
In a statement to the ASX, the key elements behind the reduction in cash earnings include:
As a guide, approximately two-thirds of the impact is expected to be recorded as negative revenue while the remainder will be recorded in costs, Westpac said.
Costs associated with responding to the royal commission are not included in these amounts.
Westpac said further details of the provisions/costs are still being finalised and will provide more information when it releases its full-year results in October.
It also said the program of reviews will continue into next year, which includes continuing to investigate and consider potential further costs associated with advice fees charged by its aligned planners.
“It is disappointing some of our past practices have not lived up to appropriate standards. We are committed to fixing any issue identified, as well as ensuring that any customer affected has not been disadvantaged,” said Westpac chief executive Brian Hartzer.
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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