The big four bank has admitted that it is struggling to remediate the clients of its aligned dealer groups.
In its full-year financial results this week, Westpac included its aligned advice businesses under ‘contingent liabilities’.
Westpac chief financial officer Peter King told analysts on Thursday (5 November) that dealer groups present an issue for the bank’s remediation program.
“Financial planning for salaried we feel like we have dealt with,” Mr King said, alluding to the remediation of clients impacted by the misconduct of Westpac’s salaried financial planners.
“Consumer bank, we have done the first round of a three-year review. So, I think we have broken the back of it but we need to go back and look at it because standards do rise.
“The one that we highlight in our contingent liabilities is our dealer groups in BT. There is no industry approach to how you deal with that at the moment. That’s probably the one that we need to bottom out next year.”
One of Westpac’s reviews relates to ongoing advice services provided from 2008 by about 1,660 planners operating in aligned dealer groups who were at the time authorised representatives of the group’s wholly owned subsidiaries Securitor Financial Group and Magnitude Group.
Securitor and Magnitude, as the AFS licensees, retained a portion of the ongoing advice fees paid to those dealer groups by clients since 2008.
Westpac confirmed that it is in the early stages of engaging each authorised representative to determine the agreements in place between those representatives and their clients, and the services provided.
“Given the early stage of the review, the time period under consideration and availability of records in relation to the relevant period, it is not practicable to provide an estimate of any potential remediation costs for circumstances where a client has paid ongoing service fees but those services have not been provided,” the bank said.
“No provision has been recognised in relation to this matter.”
CEO highlights advice issues
In the second half of FY18, BT’s cash earnings fell 40 per cent from $241 million to $163 million as the division faced remediation costs and slashed prices on its Panorama platform.
“The two big impacts on the BT result were remediation costs and some strategic pricing decisions we took to set the business up for the future. We led the market in eliminating grandfathered commissions and we introduced lower and more transparent pricing across our platforms,” Westpac CEO Brian Hartzer said.
“If you think about private wealth, it’s a great business, we have a great position in it. It has grown really strongly. We’re really happy with it. If you think about the platforms, we have done a repricing but the demand is really strong there. With BT Open the appeal is strong, the inbound interest has been fantastic and we expect that to translate into volume.
“On the insurance side we have had good growth on written premiums.
“So really it comes back to the challenge on financial advice. We have had a lot of remediation claims around that and we are still figuring out how to make that work."
Companies, investors and other stakeholders have been urged to provide feedback on draft sustainability reporting standards.
The corporate regulator said the adviser failed to prioritise his clients’ interests over his own.
Registrations have opened for the New Broker Academy, a free event set to help financial advisers who want to switch to a career in mortgage and finan...
Get the latest news! Subscribe to the ifa bulletin
Get notifications in real time and stay up to date with content that matters to you.