The Westpac Banking Corp (ASX: WBC) share price is up more than 1% despite the bank announcing a big penalty from ASIC.
Westpac penalised
The big four ASX bank has agreed with the Australian Securities and Investments Commission (ASIC) to resolve six separate longstanding matters through agreed civil penalty proceedings in the Federal Court.
Those six separate matters included investigations into:
- The provision of incorrect interest rate information provided by Westpac provided to debt purchasers.
- Charging of advice related fees to deceased customer accounts
- Incorrect issuing of duplicate general insurance policies (home and contents, and landlord insurance policies) without a customer’s consent.
- Inadequate disclosure of adviser fees received for certain superannuation and investment products
- The process for identification and management of deregistered companies, and the subsequent rectification.
- Insurance in superannuation products offered by BT where customers were inadvertently charged additional advisor commissions.
Some of these matters were self-reported by Westpac, including some of which were raised during the Royal Commission.
Westpac said that a majority of affected customers have been compensated, and any remaining payments will be completed “as quickly as possible”.
ASIC and Westpac will jointly submit agreed proposed penalties for each of the proceedings, totalling $113 million. Those penalties have been substantially provisioned, including legal costs, in the Westpac FY21 result.
Management comments
Westpac CEO Peter King said: “As flagged, we have been working to resolve a number of outstanding regulatory matters before the bank. We have co-operated with ASIC through the investigations and the process to get to this resolution today.
“This outcome is an important step forward for us as we continue to fix issues and build stronger risk foundations.
“In each of these matters, Westpac has fallen short of our standards and the standards our customers expect of us. The issues raised in these matters should not have occurred, and our processes, systems and monitoring should have been better. We are putting things right and unreservedly apologise to our customers.”
Summary thoughts on the Westpac share price
This has happened far too often over the last few years. If Westpac had simply done the right thing each time then it wouldn’t have been penalised and it wouldn’t have had to pay those legal fees either. It has had to remediate the customers.
I don’t think Westpac is a high-quality bank at this stage and the banking industry in general doesn’t really interest me. The long-term compound growth looks slow (at best) and the dividends don’t seem that compelling.
There are plenty of other ASX dividend shares I would rather be looking at.
