NAB boss Andrew Thorburn admits staff bonuses led to ‘wrong behaviour’

NATIONAL Australia Bank chief Andrew Thorburn has conceded bonuses that were on offer to staff led to “excessive risk taking” and the “wrong behaviour”.

NATIONAL Australia Bank chief Andrew Thorburn has conceded bonuses that were on offer to staff led to “excessive risk taking” and the “wrong behaviour”.

But Mr Thorburn says he believes the role of big bonuses in motivating staff has widely been overstated.

Speaking at a business event in Melbourne on Wednesday, Mr Thorburn said workers often looked for more than just money as a motivator.

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“People want encouragement. They want progression. They want to know they work for a company which makes a difference,” he said.

“So money is part of it but it is much deeper.”

His comments come as the financial services royal commission continues to expose cases of banks and other finance companies selling products and services inappropriately.

“In a market system we need incentives, (but) they can be seriously overrated in terms of their motivational capability for most of the people working for us,” Mr Thorburn said.

He acknowledged there had been wrongdoing among NAB staff due to bonus schemes.

“I think some of the incentive systems we’ve had have encouraged the wrong behaviour — they have encouraged excess and excessive risk taking and we have not had good enough controls to prevent that,” he said.

“We have to fix that.”

NAB chief executive Andrew Thorburn acknowledged there had been wrongdoing among NAB staff due to bonus schemes. Picture: Kym Smith

Many of the misconduct cases dissected at the royal commission involved staff cross-selling products and services — touting them to people who were coming into branches or calling service centres for other reasons.

Australian lenders have routinely been cross-selling services such as financial advice to banking customers under a model known as “vertical integration”.

That model is now coming under pressure following the misconduct scandals that have engulfed the industry in recent years, culminating in the royal commission.

NAB late last month changed the criteria for bonuses available to more than 4000 branch and call-centre staff, reducing the ­emphasis on financial targets.

On Wednesday, Mr Thorburn sought to defend his 30,000-strong workforce, saying it was a minority of people who did the wrong thing.

“Even when we had the wrong incentives, most people did not abuse them,” he said, speaking at the lunch hosted by the Australian British Chamber of Commerce.

A “stick” was also needed alongside the “carrot” of remuneration, he said.

“When people do the wrong thing (the stick) should be bought down hard.”

“Because our reputation relies on trust, people who break that by breaking the law or things like that — that (deserves the) stick.”

NAB in May announced it would sell its MLC division as it retreats from the wealth management sector.

Despite that move, is has previously defended “vertical integration” in a submission to the royal commission, saying the practice can “serve the interests of clients, so long as conflicts of interests are appropriately managed”.

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