NAB says it will spend another $314 million on customer refunds and compensation

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  • NAB says it has calculated additional costs of $314 million after tax in customer refunds, compensation and other costs.
  • This will reduce 2H18 cash earnings by about $261 million.
  • NAB is due to release its 2018 full year results on November 1.

The National Australia Bank announced additional costs of $314 million in connection with its customer remediation program following the fee for no service scandal and the financial services royal commission.

This will reduce cash earnings in the second half of 2018 by an estimated $261 million and earnings from discontinued operations by an estimated $53 million.

The additional costs include refunds and compensation to customers impacted by issues in NAB’s wealth business, including financial adviser service fees and plan service fees.

The big four banks are on track to pay out a combined more than $1 billion in refunds and compensation. Earlier this month the ANZ said it would need to book further charges of $374 million.

Legal fees associated with the royal commission for the big four will run into hundreds of millions.

The NAB today again apologised.

“Where we have let customers down we are determined to put things right,” says NAB Chief Executive Andrew Thorburn.

“We have made good progress in resolving a number of issues that impacted our customers and we want to compensate them as quickly as possible.”

About 69% of these costs will impact revenue, with the balance reported in expenses.

Costs associated with responding to the royal commission are not included in the additional charges.

NAB is due to release its 2018 full year results on November 1.

In the financial services royal commission in August, the NAB’s lawyers failed to suppress documents showing possible criminal counts of breaches of the bank’s licence.

The NAB allegedly charged fees for no service to superannuation fund customers, then delayed compensation when it was discovered, failed to report breaches on time and kept back the full extent of the problem of overcharging of customers.

The royal commission was told the bank was being investigated for failing to report breaches of its license to ASIC within 10 days.

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