‘We’ve made terrible mistakes’: NAB says inquiry cases upsetting, damning

NAB argues charging customers for advice they never received is wrong — but not dishonest — and the bank “accidentally” kept the money.

National Australia Bank argues that charging customers for advice they never received is wrong — but not dishonest — and the bank “accidentally” kept the money.

NAB CEO Andrew Thorburn said staff failed to connect the dots when customers transferred to its MLC Direct business continued to be charged ongoing fees when they no longer had an adviser.

Appearing at the banking royal commission, Mr Thorburn did not accept that keeping fees for a service NAB did not provide was dishonest. “It’s wrong. It’s absolutely wrong,” he said on Monday. “Dishonesty would go to the intent and I don’t feel it was dishonest in that respect.”

Mr Thorburn said the first the bank knew about the problem was when customers complained in 2015. It was an operational error and oversight, he said. “That’s where the mistake was made, but it wasn’t ‘let’s do it and see if we can get away with it’.”

Mr Thorburn said NAB did not have sufficient controls in place to ensure the ongoing advice service fee was turned off.

Royal commissioner Kenneth Hayne QC suggested another way of putting the argument was that “this money fell into the pocket of NAB accidentally”.

Mr Thorburn said he could not disagree. “It wasn’t intended to be ours but it became ours, yes.”

NAB has previously admitted charging more than 4000 dead superannuation customers $3 million in fees, among issues related to advice fees being deducted from super members’ accounts when no service was provided.

NAB only discovered that issue this year, after the Commonwealth Bank admitted charging deceased estates fees.

The inquiry has previously heard the corporate regulator believed NAB was out of step with some of its major peers over remediation for the $1 billion, industry-wide fees-for-no-service problem.

NAB is the first company to face court action, over charging hundreds of thousands of superannuation customers $100 million in fees for services they did not receive.

The royal commission is deliberately not asking questions about that specific issue because it is before the courts.

Mr Thorburn said he was wrong to oppose the banking royal commission. “The royal commission has given us real cases of real customers, where we’ve made terrible mistakes,” he said.

“When you read the case studies, you say this is so upsetting and so damning, what went wrong?” Mr Thorburn said the banks can be criticised for having put profits before people and have focused too much on the short term.

“Focusing too much on growth, short-term growth that’s not really sustainable and a sales culture was introduced, not just in our bank, in the system,” he said.

“I think that created wrong outcomes as well, unintended consequences.”

NAB kicked off the econd and final week of the royal commission’s last public hearing, which is focusing on why misconduct occurred and what can be done to prevent it in the future.

NAB chairman Dr Ken Henry, a former Treasury secretary, will also appear at the Melbourne hearing.

The inquiry last week heard the corporate regulator may now take action against NAB over home loan fraud involving its “introducer” program that pays people outside the bank for successful lending referrals.

The Australian Securities and Investments Commission previously focused on the 60 bankers who committed the misconduct, only expanding its investigation to include the bank itself after the case featured at the royal commission.

ASIC is re-evaluating every case aired during the inquiry.

AMP’s acting CEO Mike Wilkins, ANZ CEO Shayne Elliott, Bendigo and Adelaide Bank chairman Robert Johanson and Australian Prudential Regulation Authority chairman Wayne Byres will also appear before the royal commission this week.

A fees-for-no-service scandal revealed at the inquiry in April led to the departure of AMP’s CEO and chair, as barristers for the royal commission suggested Australia’s largest wealth manager face criminal charges for lying to the corporate regulator.

The heads of the Commonwealth Bank of Australia, Westpac, Macquarie Group and ASIC were questioned at the royal commission’s sitting in Sydney last week.

Originally published as ‘We’ve made terrible mistakes’: NAB says inquiry cases upsetting, damning