Westpac likely to book one-off profit by axing trail commissions
Westpac could potentially book a one-off profit of more than $50 million from its decision to axe trail commissions to mortgage advisers.
Wednesday, November 19th 2025, 6:00AM 
5 Comments
Under IFRS accounting rules Westpac is likely to be carrying the cost of future trail commissions on its balance sheet.
Now it has decided to end trail commissions to mortgage advisers next year that liability can be written back. Sources suggest the one-off profit could be as much as $70 million.
Squirrel, which accounts for around 5% of Westpac’s book, told shareholders that it will record a one-time non-cash flow loss of $3.5 million from the new Westpac model.
This is a $4 million loss, offset by a $500,000 partial offset from increased upfront commissions from the bank.
This is essentially a write-down of its balance sheet asset.
TMM asked Westpac chief executive Catherine McGrath whether the bank will record a one-off profit.
“I can't comment on that, sorry,” she said. “And generally, exactly how we do our accounting treatment isn't something that we would share more broadly anyway.”
When specifically asked whether Westpac will book a one off $50 million profit, as sources suggest, she responded; “Certainly not anything that I'm aware of.
“I don't know what speculation they're making, but as I said, specifically, how we do that isn't something I necessarily I wouldn't talk about.”
Mortgage advisers are particularly unhappy with Westpac and that is clearly demonstrated in TMM’s annual survey of advisers. The results of the survey will be published in the next issue of the magazine.
While there is an acceptance Westpac is entitled to make commercial decisions, advisers are mightily angry at how Westpac managed this process and its lack of consultation with advisers.
It choose instead to communicate only with the heads of dealer groups.
McGrath told TMM she did not expect the move to have a negative impact on business written by advisers.
However, the TMM survey shows exactly the opposite.
| « Baden Martin steps down as NZFSG CEO | ANZ sees adviser business dropping but wants to turn things around » |
Special Offers
Comments from our readers
As already mentioned, Westpac is fully entitled to make commercial decisions about the way that it renumerates mortgage advisers. What Westpac isn't allowed to do however is renege on the former renumeration model that it was offering.
Mortgage advisers in good faith placed business with Westpac expecting to receive an upfront commission at settlement and a component of trail commission paid in 13 months’ time. Westpac having been allowed originally by the head groups to pay trail commission in arrears (no other bank does this including Westpac in Australia) has now told the head groups that advisers won’t be getting any trail whatsoever for those loans settled 1/11/2024 to 14/10/2025. Essentially in a nutshell advisers were told by Westpac we will be paying you this amount for the business you send us and now Westpac have gone back on that promise. That the head groups have not fought on behalf of their members and challenged this decision legally is both appalling and indicative that head groups no longer demonstrate value now to the mortgage adviser industry, especially to those mortgage advisers who hold their own FAP licence. The same can be said also of the associations who claim to be the advocates for our industry.
I'm not sure how mortgage advisers are now supposed to have a relationship with a bank who thinks that it's ok to break an agreement/commitment to them around renumeration. If head groups are just prepared to roll over and accept this from Westpac, then what else can happen to our industry? Once the 1st of June 2026 rolls round I would struggle to understand why any adviser would voluntarily give business to Westpac. You certainly wouldn't be recommending Westpac to your customers because they have a great extra repayment policy. Westpac have the worst of all the main banks and by quite a large margin. As one adviser described it last week "it's garbage". The irony of Westpac's current online and TV campaign promoting Westpac customers been "mortgage free sooner" is palpable. Might be a good one for the Commerce Commission to challenge them on!
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
