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Bank’s “fee for no service” advice compensation costs pass half a billion

Leading Australian bank Westpac has today added another AUD$260m (£140m) to its coffers for compensating customers who received poor financial advice.

The sum comes from the bank’s first-half cash earnings for the 2018/19 financial year (July 2018-June 2019).

These extra funds push the total remediation bill to around AUD$650m (£350m) for the embattled bank, which last week announced 900 advice staff would be laid off in the sale of its struggling financial advice arm.

The cost is set to continue climbing with the bank still investigating other cases where customers may have been charged unfairly.

The bank states: “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.”

Westpac boss: Decision to exit advice was ‘not taken lightly’

Westpac chief executive Brian Hartzer says: “A priority is to deal with outstanding remediation issues and refund customers as quickly as possible.”

The provisions bring the estimated proportion of fees that will be refunded to 28 per cent.

Total fees received by Westpac’s salaried financial planners between 2008 and 2019 were just under AUD$1bn (£535m).

The investigations into the bank’s poor advice follow the closing of the 14-month Royal Commission into Banking, Superannuation and Financial Services in Australia, which has seen all four major banks caught up in a string of financial advice scandals.

The Sydney Morning Herald reports bottom lines at Westpac could take hits of up to AUD$580m (£311m) for H2 of the last financial year.

The exact figure will be outlined when Westpac hands down the results in May.

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