Westpac (ASX:WBC) to pay $87 million compensation to customers

The big bank didn’t tell its financial advice customers of important information about their shareholdings over 14 years.

| More on:
a hand holding wads of australian bank notes

Image source: Getty Images

Westpac Banking Corp (ASX: WBC) will pay out an estimated $87 million to customers who were not provided with critical information from its financial advice business.

The Australian Securities and Investments Commission revealed Friday that the bank had agreed to compensate the clients that were impacted by failures between 2005 and 2019.

The 32,000 affected customers held ASX shares through Westpac’s advice arm. The bank failed to notify them of an estimated 328,000 “corporate actions” over those 14 years.

Corporate actions include common ASX company activities like share buybacks, rights issues, share purchase plans and acquisitions.

“Westpac’s failure to notify customers of corporate actions means customers may have missed out on various opportunities,” the regulator stated.

“These include purchasing additional shares often at a discount to the market price, the creation of temporary rights or options that can be sold for a profit, and the ability to sell shares and receive a benefit that can be tax advantageous depending on the shareholder’s circumstances.”

A Westpac spokesperson confirmed the payout to The Motley Fool.

“Westpac apologises to any client of its former advice business who may be impacted by this issue,” said the spokesperson.

“Westpac reported this matter to ASIC in July 2019 and is remediating all impacted clients as appropriate. The group disclosed that it had provisioned for the corporate actions matter in April 2020.”

The Westpac share price is up 0.43% in early Friday morning trade, going for $25.76. It’s up more than 30% on the year.

Westpac to hand out remediation by the end of the year

ASIC commissioner Danielle Press said compensating clients impacted by misconduct is a critical part of holding a financial licence.

“We are pleased to see that Westpac has taken action to remediate affected customers regardless of how much time has passed.”

The bank is aiming to complete the payouts by the end of this year.

For those missed notifications that have been deemed not worthy of compensation, clients will be informed of the corporate actions retrospectively.

Press encouraged customers of Westpac’s advice arm during the impacted time period to request further information from the bank.

Westpac’s advice brands affected by the compensation include Securitor Financial Group Limited, Magnitude Group Pty Ltd and BT Financial Advice. 

Those brands stopped providing personal financial advice in 2019.

The bank first reported its failures to ASIC in 2019, then revealed further details on the matter in April last year.

Should you invest $1,000 in Westpac right now?

Before you consider Westpac, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Westpac wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares

A man raises his reading glasses in a look of surprise.
Bank Shares

Could Bank of Queensland shares deliver 46% upside AND a 4.5% dividend yield in 2022?

One broker is predicting a bright future for this bank stock.

Read more »

a man with a wry smile is behind ascending piles of coins as he places another coin on top of the tallest stack.
Share Market News

Can ASX 200 banks really see a 15% profit jump if the cash rate hits 1%?

These analysts are predicting big returns for banks in the rising interest rate environment.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Bank Shares

Why I think NAB shares could be the smartest big four ASX bank to buy

NAB looks like a solid bank to own in my opinion.

Read more »

A woman sits at her computer in deep contemplation with her hand to her chin and seriously considering information she is receiving from the screen of her laptop regarding the Xero share price
Bank Shares

Can the Macquarie share price reach $200 again in 2022?

Macquarie shares have had a tough run so far this year.

Read more »

A mle runner is in an awkward pose as the approaches an unever part of a running track through a forest with tall trees and sunlight shining through them.
Bank Shares

Latest Westpac review notes progress but flags ‘bank’s difficulty in staying the course’

The bank released independent reports on its risk governance progress.

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Bank Shares

CBA share price higher on customer experience update

CBA is building new and innovative customer experiences...

Read more »

A middle-aged woman sits in contemplation over a tablet device considering information about ASX shares and deep in thought.
Bank Shares

Is the NAB share price cheap with its recent pullback?

Here's the verdict according to analysts.

Read more »

An ASX shares broker analysing a chart tracking the A2 Milk share price
Bank Shares

Here’s why the CBA share price could soon be in for some pain

Is it buy or sell for CBA shares today?

Read more »