News: WBC UPDATE 1-Australia's Westpac to cancel 'grandfathered' payments

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June 20 (Reuters) - Australia's No.2 lender Westpac Banking Corp (WBC) said on Wednesday that wealth management arm BT Financial Advice would stop receiving so-called grandfathered payments from its financial products.

Westpac said it had decided to stop legacy payments to advisers in light of 2013 laws banning conflicted remuneration.

Payments such as commissions that had been agreed before the legislation were grandfathered, or exempted from the new rules, but Westpac said the time had come to raise its standards for such arrangements.

"We have considered this position from both a customer and a stakeholder perspective and decided that it is the right time to draw a line under these past arrangements and eliminate them as far as we are contractually able," Westpac said in a statement.

More than 140,000 customer accounts were still being charged under these legacy arrangements, it added.

The lender, however, said it would honour its contractual obligations to external financial advisers who were receiving grandfathered payments on BT products.

The move comes as Australia's financial industry faces intense pressure to reform after an independent inquiry exposed widespread misconduct, particularly in financial advice and wealth management units.

In a sign of the tougher regulatory environment, an industry watchdog filed a lawsuit against Westpac last week over a financial planner it alleges gave poor advice for years.