Westpac to remediate customers $87m for financial advisor failures

Customers of Westpac (ASX: WBC) whose financial advisors may have failed to notify them of 'corporate actions' will be remediated to the tune of approximately $87 million.

The compensation comes after the bank's financial advisors failed to let customers know about a range of activities by publicly listed companies, including buy backs, renounceable and non-renounceable rights issues, share purchase plans and takeovers.

The Australian Securities and Investments Commission (ASIC) says the failure to notify customers of these 'corporate actions' means customers may have missed out on various opportunities like purchasing additional shares at a discount, the creation of temporary rights or options that could have been sold for a profit, and the ability to sell shares to receive a benefit that may have been tax advantageous.

Westpac's remediation covers an estimated 320,000 potential missed corporate action notifications between 2005 and 2019 impacting approximately 32,000 customer accounts and is expected to be completed by the end of 2021.

"Compensating customers affected by misconduct is a very important part of licensees' obligations to act fairly, honestly and efficiently," ASIC commissioner Danielle Press said.

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

"We encourage affected customers to engage with the communications from Westpac to understand how they were impacted and to seek further information from Westpac if required."

Westpac first reported its failure to notify customers of corporate actions to ASIC in July 2019 and provided further information on the scale and significance of the issue in April 2020.

On 14 April 2020, Westpac issued an ASX announcement that included provisions for corporate action remediation.

Westpac's advice businesses involved in the remediation include Securitor Financial Group Limited, Magnitude Group Pty Ltd and Westpac Banking Corporation (known as BT Financial Advice). These businesses ceased providing personal financial advice in 2019.

Shares in WBC are up 0.55 per cent to $25.80 per share at 10.40am AEST.