Banking royal commission: NAB admits to ‘culture’ of form falsification
NATIONAL Australia Bank has admitted there was a breakdown in “culture” when hundreds of financial planning staff falsely claimed to have witnessed customers sign important forms.
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A NATIONAL Australia Bank executive has conceded there was a breakdown in culture when hundreds of financial planning staff falsely claimed to have witnessed customers sign important forms.
And employees in the bank’s financial planning division were widely left to make their own assessments of “right and wrong”, according to an internal document tabled at the banking royal commission yesterday.
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The commission heard details of a widespread problem at NAB, where 353 financial advisers and support staff falsely claimed to have witnessed signatures from customers on 2520 forms.
Those forms dictated who would receive the customers’ superannuation should they die. On many occasions, planners thought they were helping customers by cutting corners for them, the commission heard.
The problem was identified late in 2016 after one financial planner, Bradley Meyn, had his employment terminated.
In a routine check, NAB identified problems with his documentation and confronted Mr Meyn. He ceased employment in December of that year.
Mr Meyn conceded he had falsely initialled documents and had a staff member sign as a witness to a signature on a superannuation death-benefit document well after the event.
Appearing before the commission yesterday, NAB chief customer officer Andrew Hagger conceded those actions could invalidate the forms.
He said that when he became aware last May that Mr Meyn had faked customers’ initials, the case was reported to ASIC.
Mr Hagger said he had talked to the head of the committee that failed to report the matter. “I think he was wrong and we reported (Mr Meyn) to ASIC,” he said.
The broader problem of falsely-witnessed forms surfaced amid a further review last year.
Many planners believed it was “common practice” to falsely witness superannuation forms, “did not think it was serious”, and did not know it could invalidate forms, the commission heard.
“I agree it is a failure of discipline ... I agree it is cultural,” Mr Hagger said. “There is no doubt for our network the consequences of this — forms are there for a reason.
“I am not walking away from the seriousness of this.”
Mr Hagger said the bank had written to customers affected and most had now properly witnessed the documents.
Most of the advisers involved still work at the bank and were given “amber” ratings internally.
Counsel assisting the commission Rowena Orr, QC, also presented to Mr Hagger an internal report created for the NAB chief risk officer for wealth Damian Murphy that identified cultural problems a year before concerns about Mr Meyn surfaced.
“There is a prevailing assumption that employees are driven by their own sense of right and wrong rather than being guided by how the organisation has drafted appropriate conduct,” the report said.
Mr Hagger said the report had not been shared with him. Ms Orr asked if he would have liked to have seen it.
“Yes, I spoke to (Mr Murphy) about that,” he said.
“I was surprised he didn’t share this with me. We talk three times a week. He has enormous influence.”
Managers of the financial planning unit lost 10 per cent of their bonuses as a result of the problem.
Executives had complained about the hit to their bonuses, but he stood his ground, Mr Hagger said.
Mr Hagger also took a hit to his remuneration but still made $960,000 in bonuses.
ANZ PLANNER USED CLIENTS’ SUPER TO FUND OWN MARINA APARTMENT DEVELOPMENT
A DODGY ANZ financial planner used his clients’ superannuation funds to buy himself a marina apartment development, the royal commission has heard.
The planner, known only as Mr A because he is under police investigation, told the clients they were investing in a unit trust that owned the property. In fact, ownership of the $2 million property was transferred to a company he solely owned.
Mr A — who worked for ANZ subsidiary Millennium3 — had convinced five clients to put between $100,000 to $200,000 from their self-managed super into the property.
ANZ head of wealth solutions Kieran Forde conceded that, after the case came to light, the bank looked after its own interests by not properly scrutinising the advice Mr A’s had given to all his clients.
“The only logical reason is that ... the commercial interests of Millennium3 took precedence,” Mr Forde said.
Mr A’s misconduct was only uncovered when one of the marina investors complained to ANZ. Mr A had told investors the property had been on the market for two years and not sold, and was now valued at $1.2 million, well below the price they paid. After an investigation, Mr A was sacked.
Counsel assisting the commission Rowena Orr, QC, said ANZ had taken a year to refund the client who complained. It did not reach out to other customers involved at the time.
Mr Forde acknowledged to the commission the bank “should have” reached out to the other four customers.
Between May and September, 2017, ANZ received eight more complaints about Mr A, including from investors in the unit trust. The bank hired advisory house McGrathNicol to complete a report about Mr A’s financial advice.
Ms Orr said West Australian police were investigating claims Mr A moved $234,000 from customers’ super accounts without their authority.
Mr Forde said the other four investors in the marina property were in the “process” of being remediated.
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