Westpac is poised to announce a major redundancy program in its BT Financial Group subsidiary as early as next week following its strategic decision in April to exit financial advice.
Banking Day has been told by several sources with knowledge of the redundancy program that Westpac has earmarked 300 roles to go in the BT arm.
The fresh round of cost-cutting comes as Westpac accelerates its business reorganisation that will see BT’s life insurance arm migrate to the bank’s consumer division and the investment platforms shepherded into the business division.
Westpac sold part of its financial advice business earlier this year to Melbourne-based Viridian, but still employs several hundred salaried financial planners.
It is not clear how many salaried employees will be offered formal redundancies as some of the impacted roles are believed to involve staff on term contracts.
Westpac last night declined to furnish further details of the redundancy program but did not reject information presented to it by Banking Day.
A bank spokesman said Westpac was redeploying wealth management staff to other parts of the group - without confirming that all displaced employees would be given new roles.
“Support for our people and customers has been at the centre of every step of the process as we reset our wealth strategy and we have provided a comprehensive redeployment program and transition support to assist those not moving to Viridian,” the spokesman said.
“To date many employees have successfully found new roles within the Group and more are expected to finalise placements in the coming week.”
Westpac’s financial planning operation has generated much heartache for shareholders since the Hayne royal commission exposed a litany of poor conduct and errant sales practices among its advisers.
The fallout from the royal commission’s final report has gone straight to the bank’s bottom line, with the first half profit sliding more than 20 per cent - mainly because of a A$753 million provision to cover the cost of customer remediations.
Most of Westpac’s remediation bill relates to wealth management customers who were overcharged fees.
An area of particular concern has been the charging of ongoing advice fees by advisers operating as authorised representatives of BT Financial Group’s Magnitude and Securitor advice platforms.
The bank revealed in April that it planned to return almost one third of $966 million in ongoing advice fees collected by these authorised representatives since 2008.
Further provisions are expected to be booked before the end of the financial year that could bring the total remediation bill since 2017 to more than $2 billion.
The remediation effort has complicated the winding down of the financial advice business because many systems and processes have to be maintained for as long as it takes the bank to complete the compensation challenge.
The titanic remediation task has stretched the bank’s resources this year, forcing chief executive Brian Hartzer in March to hand carriage of the compensation program to his chief operating officer, Gary Thursby.
However, the bank is still drawing criticism from bank victims’ groups for delays in delivering compensation.
Hartzer revealed on 6 May that the group had returned only $200 million since the end of 2017.
“We are centralising oversight of all remediation programs and have more than 400 employees working directly on remediation projects to make refunds to customers as quickly as possible,” he said at the time.
“Over the past 18 months, we have repaid around $200 million to customers and we expect to make good progress this year in resolving key issues.”
Banking Day has learned that the magnitude of the remediation challenge has forced Hartzer to recruit new executives to the bank to help expedite the remediation process.
The most notable hiring is former ANZ executive Mandy Rutherford, who is currently chief executive of Melbourne-based debt advisory company, the AMG Group.
Rutherford held a string of jobs in her 14 years at ANZ but is probably best known as the former chief financial officer of Malaysian banking giant AmBank between 2011 and 2017.
ANZ was a part owner of AmBank, which since 2015 has been at the centre of an infamous money laundering scandal that has rocked Malaysian society to its foundations.
In that year, US investigators alleged that former prime minister Najib Razak and his associates embezzled more than US$4.5 billion from a state owned investment fund, known as 1MDB.
They claim that Najib used personal bank accounts with AmBank to move cash from the government fund. Investigations into the scandal are continuing.