ASIC hits NAB super trustee with new licence conditions

Dan Purves

By

03/02/2017

The Australian Securities and Investments Commission has imposed additional licence conditions on NAB superannuation trustee NULIS Nominees, following breakdowns in internal procedures.

The breakdowns include inadequate disclosure of insurance changes to members, inadequate training for staff, and insurance policies not being updated.

These occurred following the transfer in 2012 and 2013 of all members in a number of products to MLC MasterKey Business Super (MKBS) and MLC MasterKey Personal Super (MKPS), as well as after changes to the death and total and permanent disablement (TPD) insurance of MKBS and MKPS members.

The insurance changes affected about 400,000 members.

As a result of the breakdowns, incorrect death and TPD insurance tests were applied to MKBS and MKPS members between May 2013 and July 2015.

Incorrect assessment meant that about $1.6 million in member claims were underpaid or declined. NAB has compensated affected members a total of $1.8 million, which includes interest.

In addition, more than 220,000 member accounts were incorrectly charged planned service fees (PSFs) totalling about $34.7 million between September 2012 and October 2016, in the MKBS and MKPS products.

NAB has confirmed that it will compensate fund members for the incorrect charge and has also confirmed the amount it will pay. ASIC’s inquiries into the PSF breaches are continuing.

Independent expert review

The new conditions on NULIS’s Australian Financial Services (AFS) licence require the trustee to engage an ASIC-approved independent expert to assess and report on the adequacy of its compliance and risk-management practices for its retail and wrap superannuation funds.

NULIS has agreed to the conditions, and KPMG has been appointed as the independent expert.

The review will consider, among other things, NULIS’s:

  • Risk-management procedures
  • process for implementing product changes, disclosure and reporting to members
  • procedures for managing conflicts of interest within NAB’s superannuation business, including the assessment of related-party service providers.

The independent expert will report to ASIC and NULIS and provide recommendations as to any steps NULIS should take to ensure that its procedures are adequate. NULIS is also required, under the licence conditions, to inform ASIC of any recommendations it does not propose to implement, and provide reasons.

ASIC commissioner Peter Kell said, “The additional conditions imposed on NULIS’s AFS licence reflect ASIC’s priority of improving compliance and disclosure standards in the superannuation industry, including vertically integrated financial services licensees.”

ASIC imposed the conditions on NULIS following inquiries into breach reports NAB’s wealth entities lodged.

ASIC has acknowledged the co-operative approach NAB and NULIS have taken in this matter.