Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

Why Today’s Royal Commission Update Is Hurting The Westpac (ASX:WBC) Share Price

The Westpac Banking Corp (ASX:WBC) share price will be under scrutiny today, the major ASX bank has provided another update about customer remediation. 

The Westpac Banking Corp (ASX: WBC) share price will be under scrutiny today, the major ASX bank has provided another update about customer remediation.

Westpac Banking Corporation, more commonly known as Westpac, is one of Australia’s ‘Big Four’ banks and a financial-services provider headquartered in Sydney. It is one of Australia’s largest lenders to homeowners, investors, individuals (via credit cards and personal loans) and business. Its name is a portmanteau of “Western” and “Pacific”.

Westpac’s Royal Commission Update

Westpac’s cash earnings for the first half of FY19 will be reduced by approximately $260 million due to additional customer remediation arising because of the issues raised in the Royal Commission.

Of the $260 million, around 90% relates to previous financial years. Half of it was for financial advice, the rest is for business and consumer banking. The amount includes interest on fees.

However, the bank said that the provisions exclude any allowance for refunds to customers of authorised representatives for ongoing advice service fees which are still being determined.

Westpac CEO Mr Brian Hartzer said: “A key priority is to deal with outstanding remediation issues and refund customers as quickly as possible. 

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.”

The estimated proportion of fees that will be refunded has been increased to 28% as a result of these provisions.

As part of part of the ASX release Westpac outlined that total fees received by authorised representatives from their customers in the decade from 2008 to 2018 was around $966 million. Within that, fees from customers of authorised representatives under BTFG licences were approximately $437 million.

What does this mean for Westpac?

Another hit to its profit is not a good revelation for Westpac shareholders. It would have been better if Westpac and the other big banks had never done this because of the reputation damage they have suffered, which could be a much larger hit to profit over the long term.

Westpac also seemed to be signalling that there could be more costs to come, so investors should keep that in mind when considering an investment, as it could be one of the contributors to the possibility of a dividend cut in the future.

[ls_content_block id=”14947″ para=”paragraphs”]

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content