Westpac is trying to exit its scandal-plagued financial advice business after confirming that it is “exploring options” for the operation.
Speculation has intensified in the last month that Westpac has been sounding out buyers for its in-house advice arm that employs more than 300 planners.
While a bank spokesman confirmed that Westpac was reviewing options for the business, he would not say whether the bank was already in strategic talks with a potential buyer.
“We believe in the important role of advice in supporting Australians to develop a financial plan for their future, but for some time we have said we need to think about how we do that given we are seeing a significant increase in the cost of providing advice and a complex regulatory environment,” the spokesman said.
“As part of that process, we continue to explore options.
“Our goal remains to provide access to good financial planning advice. How we will do this into the future is something we continue to work through.”
All of the major banks are under pressure to offload their in-house financial advice arms after evidence presented to the Hayne royal commission identified systemic non-compliance, misconduct and mismanagement of conflicts of interest.
The reputation of Westpac’s advice arm was severely damaged in November after managing director Brian Hartzer told the commission that an internal review found that around half of the bank’s planners had failed to comply with record keeping standards.
The bank recently overhauled the remuneration arrangements for its financial planners, which included the abolition of incentive payments linked to sales targets.
The change is believed to have angered many planners who are expecting to suffer declines in their gross pay this year.
Under these circumstances, selling the operation before planners abandon ship appears to be a sensible step for the bank.
While commissioner Hayne did not recommend a separation of advice from product manufacture in the wealth management sector, there are signs that fewer high net worth clients want to deal with bank-owned advice groups.