Advice remediation still dragging on Westpac
Westpac may have substantially exited financial advice but it has announced an increase in its provisioning for advice remediation.
The big banking group told the Australian Securities Exchange (ASX) today that its second half earnings would be recued by an estimated $341 million due to customer remediation programs, totalling $958 million in customer remediation for FY19.
It said the aggregate customer remediation programs and costs related to the previously announced wealth reset would reduce earnings by $377 million in the second half.
The ASX announcement said that of the $341 million impact on cash earnings, 72% related to customer payments (including interest) while the rest related to costs associated with running the remediation programs.
It said the majority of new provisions related to ongoing advice service fees and changes in how the time value of money was calculated including extending the forecast timing over which payments were likely to be made.
“The current estimated provision associated with authorised representatives now represents 32% of the ongoing advice fees collected over the period,” the announcement said. “For salaried planners the estimated per centage is 26%.”
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