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