Royal Commission

The news, analysis and insights into the fifth round of public hearings covering superannuation

NAB trustee prioritises bank over customers: counsel

National Australia Bank was denied its request to keep a range of documents labelled “suspected offending” secret, as the Hayne royal commission’s fifth round of hearings uncovered more details about how the bank planned to compensate customers who paid advice fees but received no service.

On Thursday morning, Commissioner Kenneth Hayne refused NAB’s request to keep private all or part of seven documents between it and ASIC about plans for remediating customers who were charged “plan service fees” (PSF), which they were not explicitly told they could opt out of.

“The matters, which are the subject of the sought non-publication direction, are matters which go centrally to the terms of reference,” Hayne said. “It is in the public interest that there be an open and transparent inquiry into how both the regulator and the regulated deal with the issue of remediation.

Later on Thursday, counsel assisting Michael Hodge grilled the former chair of NAB’s superannuation trustee NULIS Nominees, Nicole Smith, for a third day and put to her that the company had failed in its trustee duty to act in the best interests of the members, and ultimately favoured NAB’s interests over its customers.

He said this with respect to receiving payment from customers for financial advice they did not receive, the delay in transferring customers into low-fee MySuper accounts from higher-fee products, and under-investing in growth and unlisted assets, to benefit NAB.

Smith rejected these assertions.

Hodge told the commission he wanted to keep the NAB case study open.

In what has been a horror week for NAB, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has heard information about how the bank came to be charging advice fees for no service, and the way that it remediated its customers for those incorrectly charged fees.

At the same time, Hayne has asked if NAB might have left itself open to criminal charges emanating from charging fees-for- no-service.

In attempting to keep the correspondence with ASIC private, NAB emphasised that the discussion between it and the regulator over remediation for affected customers was yet to reach a conclusion.

Hayne rejected this as an issue after balancing “on the one hand, public interest in the open and transparent operation of a public inquiry into a matter of public interest, and on the other hand, the public interest in protecting the privacy of an individual, or the public interest in protecting private commercial interests”.

He added that one of the documents NAB sought to keep private was from ASIC and was titled “outline of suspected offending by the NAB Group”.

This week, the Hayne royal commission has heard that NAB’s wealth management arm, MLC, might be on the hook for another round of compensation payments after it failed to clearly communicate a PSF could simply be switched off if customers requested.

This would be in addition to the more than $120 million MLC has already paid in two previous rounds.

NAB’s former executive general manager of wealth products, Paul Carter, who appeared at the beginning of the fifth round of royal commission hearings on Monday, was questioned in detail by  Hodge about why it took him and his team multiple years to extend compensation to clients who had paid the PSF to cover general advice but had no advisers linked to their account – a situation that began in 2012.

On Friday, Financial Sector Union national secretary Julia Angrisano said the “evidence clearly shows that NAB bent over backwards to find a way to maintain fees”.

The forensic examination of the practices of NAB and its trustee NULIS Nominees has caused the schedule of the fifth round of baking inquiry hearings to blow out.

Ian Silk, the chief executive of the country’s largest super fund, AustralianSuper, will appear on Thursday afternoon.

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Royal Commission

into Misconduct in the Banking, Superannuation and Financial Services Industry

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established on 14 December 2017 by the Governor-General of the Commonwealth of Australia, His Excellency General the Honourable Sir Peter Cosgrove AK MC (Retd).

The Governor-General issued Letters Patent which formally appoint the Royal Commissioner and outline the Terms of Reference for this inquiry.

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