Last week, Westpac said it would exit face-to-face financial advice in BT Financial Group, moving the businesses into the consumer and business divisions.
In an announcement to the ASX, Westpac said it is working to estimate remediation costs involving advisers who had clients who paid for ongoing services but no services were provided.
However, Westpac said it has not yet been able to finalise a reliable estimate of the proportion of fees that may need to be refunded.
Further, interest on refunded fees and additional costs to implement this program will also need to be considered when determining any remediation provisions.
Westpac also said it is focused on identifying and making refunds to customers as soon as possible and will commence remediation in the second half of 2019 for customers of advisers still operating under BT Financial Group’s (BTFG) licences.
However, it said this remediation program is more challenging because many of the authorised representatives’ files have been difficult to access.
Westpac announced its cash earnings for the first half of 2019 will be reduced by around $260 million due to its work on customer remediation.
If said that of the estimated $260 million impact on cash earnings:
- About 90 per cent relates to issues identified in previous financial years;
- Around half of the provisions relate to the financial advice business while the remainder relate to business and consumer banking; and
- The $260 million includes costs associated with implementing the remediation programs along with interest on fees to be refunded.
The key remediation items include customer refunds associated with certain ongoing advice service fees charged by its salaried financial planners.
Westpac said the additional provisions reflect an increase in the estimated proportion of instances where records of financial advice were insufficient for the purposes of the remediation.
As a result, the provision for this item has increased, bringing the estimated proportion of fees that will be refunded to around 28 per cent.
Westpac chief executive Brian Hartzer said a key priority is to deal with outstanding remediation issues and refund customers as quickly as possible.
“As part of our ‘get it right, put it right’ initiative, we are determined to fix these issues and stop these errors occurring again,” he said.
“We will continue to review our products and services to ensure they deliver the right outcomes for customers and, if necessary, make further provisions.”
OMG
So what do they do when faced with an unlimited contingent liability
Encourage self licensing and pass it off to Veridian
Given westpac comments would I become self licensed with them and take on this risk
NOT In A MILLION YEARS!!
A friend has been emailing BT Super for months asking for a refund of the adviser fee (she has never met the adviser let alone got advice).
BT has never replied despite several emails.
It’s all too hard for them. They would be inundated with similar request.