- NAB Chair Ken Henry wishes the bank moved earlier to pay back fees charged to customers for advice not given.
- He says he’s still not sure what action the bank should have taken.
- But says it was not good enough to make customers wait years before remediation.
Ken Henry, the chair of the NAB, says he has pondered many times what the bank should have done differently when it discovered the “fee for no services” scandal.
But he told the financial services royal commission today that he still isn’t sure what that action should have been.
“We all agree we should have done something differently,” he told the hearing in reply to a question from senior counsel assisting the commission, Rowena Orr.
“Honestly, I’m not sure exactly what and when. My feeling is … I wish that we (the board) had said to management, certainly two years ago, perhaps even earlier, ‘Enough is enough. Forget about negotiating with (corporate regulator) ASIC. Just do it.'”
He was saying the bank should have started paying back the fees charged without agreeing on a course of action with the regulator.
Today’s hearing referred to a paper given to the NAB board of directors in August 2015 when the adviser service fees issue was reported for the first time in a regulatory engagement report to NAB’s board.
The report said: “ASIC has escalated to enforcement its investigation of NAB Wealth breaches regarding overcharging of ongoing adviser service fees. The breaches relate to situations where clients requested the removal of advisers from their accounts, but where ongoing service fees continued to be charged.”
In September this year, ASIC took NAB to the Federal Court over breaches of the Corporations Act relating to $100 million in fees charged to hundreds of thousands of superannuation customers for services not provided.
NAB announced in June this year that it would refund about $87.1 million, including interest. It had previously refunded $35.9 million.
Orr asked Henry what the bank should have done when it discovered that fees had been charged but no service provided.
“I’ve asked myself that question many times. And in particular, I’ve asked myself the question what should the board risk committee have done, what should the board have done,” he replied.
“Of course a board cannot and should not manage the business. That’s almost axiomatic. But the board does have to be accountable, as I was saying yesterday, for the impact of the business, and including impact with regulators and with the community generally.
“And the board has to take responsibility for the reputation of the business. And there’s absolutely no doubt that the reputation of NAB has been tarnished considerably by these matters and the way in which they’ve been handled by management. There’s no doubt about that.”
Henry said it was not good enough to make customers wait years before remediation.
“It is not good enough that we submit our customers to that process, where it may take years to negotiate with ASIC,” he said.
However, he says the danger of moving without ASIC’s agreement is that the regulator could come back later and disagree with that action.