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Friday 2 July 2021

21-160MR Westpac to remediate customers for failure to pass on important corporate action information

Westpac has committed to remediating customers whose financial advisers may have failed to notify them of corporate actions between 2005 and 2019. Westpac estimates approximately $87m will be paid in compensation to affected customers who are former clients of Westpac’s advice businesses and held ASX-listed securities through platforms.

Corporate actions cover a range of activities by publicly listed companies, including buy backs, renounceable and non-renounceable rights issues, share purchase plans and takeovers. Westpac’s failure to notify customers of corporate actions means customers may have missed out on various opportunities. These include purchasing additional shares often at a discount to the market price, the creation of temporary rights or options that can be sold for a profit, and the ability to sell shares and receive a benefit that can be tax advantageous depending on the shareholder’s circumstances.

Westpac’s remediation covers an estimated 328,000 potential missed corporate action notifications impacting approximately 32,000 customer accounts. This is a complex remediation due to the various types of corporate actions involved.

Westpac aims to compensate most of the affected customers by the end of 2021. Customers will also be informed of missed corporate action notifications where Westpac has determined that no compensation is payable.

‘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,’ Ms Press said. 

ASIC encourages all advice licensees and platform operators to consider their corporate action management arrangements  and to ensure customers, who are entitled to receive notifications of corporate actions, are notified appropriately. This is particularly relevant when platform operators have arrangements with financial advisers and advice licensees for them to pass on information about corporate actions to customers, instead of the platform notifying customers directly.

Background

Platform operators may appoint custodians to hold legal title to customers’ investments, including listed securities. As the listed securities are not held in the customer’s name, communications about corporate actions from share registries do not go directly to the customer. When platform operators receive notifications of corporate actions in respect of those listed securities, depending on their specific arrangements, some operators pass on the notifications to the investor’s financial adviser or advice licensee.

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.

Westpac has created a corporate actions website(https://www.bt.com.au/personal/help/corporate-actions.html) and will be sending letters and information to affected customers about the remediation program, the opportunities they missed out on and where applicable, how their compensation amounts have been determined.  

Westpac’s remediation program has also been informed by ASIC’s field guide: Making it Right: how to conduct a consumer centred remediation.

Affected customers who have concerns or complaints should contact Westpac’s BT Complaints Team in the first instance. If the outcome is unsatisfactory, customers can lodge a complaint with the Australian Financial Complaints Authority (AFCA). AFCA is a free and independent dispute resolution scheme, which considers complaints about financial products and services.

Last updated: 02/07/2021 08:27