Westpac compo bill nearing $2b

WESTPAC’S bill to compensate customers who were provided with dud financial advice or overcharged is closing in on $2 billion.

Australia’s second largest bank has warned investors it will take another $488 million hit in its forthcoming full-year results. That will slice $341 million from its pre-tax cash profit, Westpac said.

The bank has now spent or set aside $1.93 billion to compensate customers and run its remediation programs since 2017.

The latest hit includes $239 million related to poor financial advice and $171 million for business loans that did not automatically switch to principal and interest when they were meant to.

The bank releases its fullyear results early next month.

Chief executive Brian Hartzer said dealing with outstanding remediation issues and refunding customers had been a “key priority” this year.

“The additional provisions announced today are part of that commitment,” he said yesterday.

“As part of our ‘get it right, put it right’ initiative we are determined to fix these issues enough investor interest. Bain Capital has bought a 70 per cent stake in Retail Zoo, which also operates food outlets Salsas, Betty’s Burgers and Cibo Express. The Melbourne company has more than 640 outlets across the globe, a and stop these ring.

“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 72 per cent of the latest remediation bill related to customer repayments and compensation.

The rest related to costs associated with running the remediation programs, it said.

Westpac also said it was not making a provision for an investigation being conducted by Australia’s anti-money laundering regulator. errors occurmixture of franchisee and company-owned.

Two other Australian share floats have been abandoned this month, for the consumer lender Latitude Financial and coal seam gas services firm MPC Kinetic.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is probing Westpac for failing to report large numbers of international funds transfer instructions over a number of years.

Westpac said it was unable to determine at this stage how much the matter might cost it. But it warned enforcement action by AUSTRAC could result in a “significant financial penalty”.

Commonwealth Bank was last year fined a record $700 million fine for breaching of anti-money laundering and counter terrorism financing laws more than 50,000 times.