Westpac to sell off its scandal-hit services

WESTPAC is selling its personal financial advice business as Australia’s second-biggest bank exits the scandal-hit sector.

Westpac said yesterday it would absorb the private wealth, investments and superannuation capabilities of its BT Financial unit into its business bank, and sell its personal advice assets to Viridian Advisory for an undisclosed amount. The move follows rival ANZ’S sale of its financial planning groups to IOOF and comes after the financial services royal commission heard instances of fees for no service, excessive fees and conflicts of interest in the industry.

“The decision to exit the provision of personal financial advice by financial advisers under our licence has not been taken lightly,” Westpac chief executive Brian Hartzer said.

The changes will be complete by June 30 and result in one-off costs of $250 million to $300 million across two years, but earnings-per-share will improve in the 2020 financial year due to the exit from a high cost, loss-making business.

Viridian will offer employment to as many as 175 salaried advisers and other staff, Westpac said, while advisers under the Securitor and Magnitude brands will have options including self-licensing or moving elsewhere, possibly to Viridian.

About 900 jobs could go although Westpac will look to redeploy some staff.

“We’re realigning our capabilities into the lines of business where it makes most sense based on customer needs,” Mr Hartzer said.

Insurance will be moved into Westpac’s consumer bank, which will be led by current business bank chief executive David Lindberg.