Finance Finance News Westpac sets aside a further $260m to pay back customers

Westpac sets aside a further $260m to pay back customers

westpac money laundering fine
The Westpac fine is the largest in Australian corporate history. Photo: AAP
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Westpac’s remediation bill continues to grow, with the bank setting a further $260 million from its half-year cash earnings for customers still owed money for bad financial advice problematic loans.

The bank said on Monday about half the allocation was related to financial advice and the remainder to business and consumer banking, including for interest-only loans that did not correctly switch to principal and interest.

The provision will be recorded in Westpac’s first-half results and follows $118 million set aside in the 2017 financial year and $281 million in 2018, bringing Westpac’s total remediation bill to $659 million with fees-for-no-service refunds yet to come.

“We are determined to fix these issues and stop these errors occurring again,” chief executive Brian Hartzer said.

The bank said it was still trying to calculate fee-for-no-service refunds for customers of authorised advisers.

“We will continue to review our products and services to ensure they deliver the right outcomes for customers and, if necessary, make further provisions.”

Westpac said it will assess provisions for authorised representatives as part of its first-half results, which are due on May 6.

Shares fell about 1.5 per cent in the first few minutes of Monday’s trade, with only ANZ recording bigger falls (dropping about 2.5 per cent by 2pm).

Lending practices attracted law suit

Westpac’s lending practices, scrutinised in depth at the hands of the royal commission, are also now the subject of a class action being led by law firm Maurice Blackburn.

The class action was filed with the federal court on February 21, claims the bank left thousands of Australians with unsuitable home loans, and has been filed as an ‘open’ class action so anyone who recieved a loan from the bank which they believe to have been inappropriate for their financial circumstances can join the action.

Consumer Action Law Centre chief executive Gerard Brody told The New Daily at the time that the action could be the first of many, with all the big banks found to have weaknesses in their lending practices.

Reviews of affected clients overdue

The full amount of compensation owed to customers of the big four banks and AMP is expected to exceed $1.15 million however the exact total is not yet finalised, as the banks are yet to complete a full review of their customer base to identify customers who were charged fees for services they didn’t receive.

ASIC accused the big four banks and AMP failing to “sufficiently prioritise and resource” these reviews, and said the delay in completion was unreasonable.

– with AAP