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Westpac to pay $87 million back to customers

·2-min read
Hands remove Australian money from a wallet and the exterior of a Westpac branch
Westpac will remediate around 32,000 customers impacted by repeated failures within the banks advice business (Source: Getty)

Tens of thousands Australians are set to receive a combined total of $87 million as Westpac begins remediation action over failing to notify its customers of crucial investing opportunities between 2005 and 2019.

Westpac estimates it will pay the huge compensation amount to affected customers who are former clients of Westpac’s advice businesses and held ASX-listed securities through platforms.

ASIC said the corporate actions covered a range of activities by publicly listed companies, including buy-backs, share purchase plans and takeovers.

Westpac’s failure to notify customers of corporate actions means customers may have missed on potential investing opportunities, ASIC said.

Westpac said it hopes to have remediated all the customers by the end of 2021, though ASIC noted it will be complicated because each breach was different and the bank will need to determine the value of each opportunity lost.

Customers will also be informed of missed corporate actions where Westpac has determined that they won’t be receiving compensation.

“Compensating customers affected by misconduct is a very important part of licensees’ obligations to act fairly, honestly and efficiently. We are pleased to see that Westpac has taken action to remediate affected customers regardless of how much time has passed,” ASIC Commissioner Danielle Press said.

“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.”

What is a corporate action?

A corporate action is an event carried out by a company that materially impacts its stakeholders (e.g. shareholders or creditors).

Common corporate actions include the payment of dividends, stock splits, tender offers, and mergers and acquisitions.

Westpac estimates that its financial advisers did not notify customers of these material changes on around 328,000 occasions and impacted around 32,000 customers.

ASIC said these failures meant that Westpac customers may have missed out on purchasing additional shares at a discounted price or the ability to sell shares and receive a benefit that could be tax advantageous, for example.

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