Royal Commission: Dead people charged fees by NAB’s super arm

NAB’S superannuation arm has confirmed it charged fees to dead clients at today’s finance royal commission. It follows revelations in April that some financial advisers at the Commonwealth Bank were also slugging the deceased.

THE ROYAL Commission has heard National Australia Bank’s superannuation services charged dead people fees.

It follows revelations in April that some financial advisers at the Commonwealth Bank charged dead clients fees — one for more than a decade.

The former chair of NAB’s superannuation trustee Nulis, Nicole Smith, this morning confirmed there had been instances of dead people being charged fees on their super accounts, but it is unclear how many.

Ms Smith confirmed the cases were unearthed after NAB went through its books in May following the CBA revelations.

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Earlier, Ms Smith said there was a “conflict” when bankers behind possible overcharging of fees were asked to review whether customers got their cash back.

Counsel assisting the Royal Commission, Michael Hodge QC, is examining the case of NAB wealth charging fees but providing no service, which has now seen customers being refunded up to $122 million.

Mr Hodge said there was a conflict that people who had levied the fees were now examining — and recommending to the superannuation trustee board — as to how or whether to compensate.

“It is hopelessly conflicted isn’t it? If it is the one (doing the review) that has taken the money and has to pay it back,” Mr Hodge asked the former chair of NAB’s superannuation trustee Nulis, Nicole Smith.

“Yes, there is a conflict in terms of the revenue,” she said.

When Mr Hodge pressed the point later, Ms Smith said: “I believe it is conflicted — but not hopelessly conflicted.”

Nicole Smith. Picture: Stuart McEvoy/The Australian

But Ms Smith said there was “appropriate representation” from the trustee working with NAB, and outside legal advice was sought and that the review process was considered independent.

Mr Hodge also showed Ms Smith emails of the corporate cop — the Australian Securities and Investments Commission — expressing concern that Nulis was “relying on the administrator” for too many things.

Also this morning commissioner Ken Hayne also asked Ms Smith if she had considered the “taking money to which there was no entitlement” could be “a question of criminal law”.

Ms Smith said: “No I didn’t”.

And Ms Smith acknowledged she did not challenge the bank on some of their internal processes which led to the scandal.

The former trustee chair said that when she found out customers had been charged for having a financial planner — even though there wasn’t one connected to their account — she said she believed they should be compensated.

But Mr Hodge showed evidence that NAB wealth looked at ways of keeping the cash by saying other services were provided.

“Did you say to (NAB) ‘we need to understand what the process is by which you go about taking money that you are not entitled to’,” Mr Hodges asked her.

Ms Smith said she had not said those “specific words”.

Mr Hodge asked if she said words like that, to which she replied “no”.

Michael Hodge. Picture: David Geraghty/The Australian

The result of the regulator’s concerns was the trustee entering into licence conditions and an independent external review forced by the corporate cop.

The royal commission saw internal documents showing 220,000 personal super fund members had been incorrectly charged $35 million for not having an adviser linked to their account.

Those customers were paid back two years ago, with each receiving about $160.

Two weeks ago, NAB said it would pay them an additional $67 million because they were not told they could opt out of the fees. They will also get an extra $20 million for investment earnings missed out on.

SUPER FUNDS BANKROLLING WEBSITE TO BE QUESTIONED

The next witness to appear after NAB is Ian Silk, the chief of the $140 billion AustralianSuper.

Mr Silk was this morning seen entering the Federal Court precinct in Melbourne where the commission is being held.

He is expected to be asked about why AustralianSuper and other funds looking after Australian’s retirement savings are bankrolling The New Daily news website.

Counsel assisting the commission, Michael Hodge QC, on Monday revealed the commission will scrutinise the website as it examines the use of consumer’s retirement savings over the next two weeks.

The New Daily is owned by Industry Super Holdings, which is in turn owned by a range of union-affiliated and not-for-profit “industry” super funds.

The site is produced by Motion Publishing, with directors including former Herald Sun and The Age editor, Bruce Guthrie and digital publisher Eric Beecher.

“AustralianSuper is the largest shareholder in Industry Super Holdings, followed by CBUS, Hesta and Host-Plus. Industry Super Holdings owns various entities that provides services to the industry funds,” Mr Hodge said.

During this round of hearings, the commission is examining scandals in the super industry, which holds $2.6 trillion of Aussie retirement funds.

Counsel assisting the commission Michael Hodge QC also revealed the commission has been flooded with tales of Australians being whacked by superannuation fees for advice and insurance they didn’t ask for.

In his opening statement for the fifth round of hearings on Monday, he also showed evidence that Australians were often not financially literate enough to understand their super documentation.

As a result, many would struggle to keep track of their retirement savings performance, Mr Hodge said.

He also said there was some confusion between the main regulators, the corporate cop — the Australian Securities and Investments Commission — and the bank regulator, the Australian Prudential Regulation Authority, in co-operating to oversee the system, he said.

Mr Hodge asked what happened when trustees were tempted to do the wrong thing.

“What happens when we leave these trustees alone in the dark with our money? Can they be trusted? If they cant what must be done to protect Australian’s retirement savings?” he said.