Westpac (ASX:WBC) share price struggles amid surging customer refunds

Westpac's refund bill is really adding up, unsettling some investors…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

The Westpac Banking Corp (ASX: WBC) share price is struggling to stay in the green today. This follows an update from the Australian Securities and Investments Commission (ASIC) revealing a further $561 million in fee for no service refunds made by ASX-listed financial shares.

At the time of writing, shares in Australia's oldest bank are relatively flat at $24.87 apiece, up just 0.12%.

The Westpac share price is also underperforming its peers so far today, with Commonwealth Bank of Australia (ASX: CBA) shares currently up by 1.14%. Westpac shares have, however, gained almost 50% over the past 12 months.

It comes at a cost

According to the ASIC release, six of Australia's largest banking and financial services institutions have paid or offered an additional $561 million in compensation because of fees for no service or non-compliant advice. This includes the big four banks, as well as Macquarie Group Ltd (ASX: MQG) and AMP Ltd (ASX: AMP).

As a result, the total tally paid by the banks has swelled to $1.86 billion as at 30 June 2021. A figure that has been growing since the findings of the Hayne banking royal commission.

The corporate regulator's update shows that Westpac forked out a further $388.6 million in the front half of 2021. This increase means the bank is second only to NAB for the highest amount of compensation paid, currently pegged at roughly $630 million. Certainly not a podium finish that is doing the Westpac share price any favours today.

Intriguingly, the number of customers slated for compensation from Westpac is nearly one-tenth that of the National Australia Bank Ltd. (ASX: NAB). This means the average compensation claim from Westpac customers is much higher.  

Also not helping the Westpac share price

As we covered earlier today, Westpac's review of its partnership with Afterpay Ltd (ASX: APT) due to the proposed acquisition of Afterpay by Square (NYSE: SQ) might be weighing on the Westpac share price today.

A banker from Westpac said the company will be "thinking through the strategic implications given Square's interest in merchant acquiring and business loans".

The Westpac share price is underperforming the broader S&P/ASX 200 Index (ASX: XJO) today. While the bank's shares are barely breaking even, the index is up 0.22% in afternoon trade.

Motley Fool contributor Mitchell Lawler owns shares of AFTERPAY T FPO, Commonwealth Bank of Australia, and Macquarie Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Bank Shares

Could the growth of Kiwibank impact ANZ shares?

Could a competitor hurt ANZ’s outlook?

Read more »

Shocked office worker staring at computer screen with colleagues working in the background.
Bank Shares

Why CBA shares could keep on rising

Can the ASX banking giant continue to defy analyst expectations?

Read more »

A man looking at his laptop and thinking.
Share Gainers

Thinking of selling your CBA shares? This expert says you should hold on

CBA shares are up by about 80% since November 2023.

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Bank Shares

The catalysts that could bring CBA shares back to earth

CBA is now the world's most expensive banking stock.

Read more »

A money jar filled with coins, indicating an investment return from an ASX dividend share
Bank Shares

Is the CBA share price a buy for passive dividend income?

CBA is one of the biggest dividend payers in Australia. Is it a good buy?

Read more »

a woman looks exhausted and overwhelmed as she slumps forward into her hand while looking at her laptop screen.
Bank Shares

What Microsoft's lost decade could mean for CBA shares

Could CBA shares be worth the same in 10 years time?

Read more »

Woman calculating dividends on calculator and working on a laptop.
Bank Shares

When does Macquarie expect Westpac to cut its dividend?

Here's the latest forecast for this banking giant's dividend.

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

When will CBA shares stop rising? CSL might give us a clue

CSL's history might tell us what's in store for CBA.

Read more »