Westpac has flagged a potential $290 million reduction in earnings as a result of ongoing remuneration programs for customers.
The funds are part of Westpac's remuneration programs in the wake of the financial services Royal Commission findings and is expected to impact the group's 1H19 figures.
CEO Brian Hartzer says looking after customers is now Westpac's priority.
"A key priority is to deal with outstanding remediation issues and refund customers as quickly as possible," says Hartzer.
"As part of our 'get it right put it right' initiative we are determined to fix these issues and stop these errors occurring again. We will continue to review our products and services to ensure they deliver the right outcomes for customers, and if necessary, make further provisions."
This anticipated remuneration program for 1H19 is up significantly from previous years. At the end of full year 2017 and 2018 the remediation impact was $118 million and $281 million respectively.
Of the $260 million, around 90 per cent relates to issues from previous financial years, with around half relating to the financial advice business with the remainder relating to business and consumer banking.
Westpac says that they key remediation items include customer refunds associated with advice fees charged by financial planners, refunds for customers that had interest only loans that did not automatically switch to principal and interest loans, and refunds for customers who were provided with business loans where they should have been provided with loans covered by the National Consumer Credit Protection Act.
Shares in Westpac are down 1.51 per cent to $26.11 per share at 10.52am AEDT.
Business News Australia
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