NAB to ban mortgage introducer payments in wake of banking royal commission ire

NAB says it will scrap mortgage introducer payments after the program came under fire during the Hayne inquiry.

A National Australian Bank branch in Sydney. Hollie Adams/The Australian

National Australia Bank has scrapped its problematic mortgage introducer referral program, after the scheme came under fire during the Hayne royal commission last year.

The royal commission heard evidence of a fraud ring among NAB (NAB) employees in Western Sydney, who were motivated by commissions and wrote hundreds of millions in dodgy home loans as part of the bank’s introducer program.

“Through the Royal Commission we heard clearly that our actions need to meet the expectations of our customers and the community,” said acting chief executive and incoming chairman Philip Chronican.

“We need to be simpler and more transparent to earn trust.

“We have to put customers first, to be a better bank.

“We want customers to have the confidence to come to NAB because of the products and services we provide — not because a third party received a payment to recommend us.”

Effective October 1, NAB will no longer make referral payments to introducers.

“Like other businesses, we will still welcome referrals and will continue to build strong relationships with business and community partners,” Mr Chonican said.

“However, there will be no ‘introducer’ payments made.

“I understand the significance of these changes for our people and our industry, yet I am certain it’s the right thing to do.

“NAB has a significant role to play in leading the change our customers and the community want to see.”

Earlier this month, NAB said it had completed or is in the process of implementing 26 of 72 recommendations from the final report of the banking royal commission.

The bank told the market at the time that it agreed with 72 or the inquiry’s 76 recommendations and would seek clarity from the government and regulators on the rest “with a view to taking positive action”.

Today’s announcement comes after former chief executive Andrew Thorburn and chairman Ken Henry were forced to resign in February following scathing criticism of NAB’s leadership team in the royal commission final report.

At the royal commission in November, Mr Thorburn defended the introducer program, saying NAB had implemented the necessary changes, while admitting the program had encouraged bad behaviour.

“We put the bait right there … they stepped over the line,” he said at the time.

“I feel confident we’ve gone through some very sensible steps to this point.

“It is a benefit to the customer for convenience and speed and confidence in seeing somebody who is endorsed by somebody that they respect.”

His comments followed an internal review of the program, which found that the bank’s remuneration structures had driven the bribe-taking employees involved in the fraud ring to write hundreds of millions of dollars in dodgy home loans.

Mr Chronican will replace Dr Henry as chairman later this year, after he indicated he did not want to be considered for the role of permanent CEO.