NAB slices fees in MLC wealth unit

National Australia Bank will introduce large fee cuts across selected investment platforms in its wealth unit.

National Australia Bank will introduce large fee cuts across ­selected investment platforms in its wealth unit, amid heightened scrutiny of bank charges and following similar moves by rival Westpac.

But the decision comes at an interesting juncture for NAB, as the bank seeks to spin off its MLC Wealth division this year through a sharemarket float or by handing shares to investors in a demerger.

The NAB fee reductions see administration charges on MLC’s retail Wrap Series 2 platforms halved to 0.15 per cent per annum on balances between $200,000 and $500,000, and a 40 per cent cut for balances above $500,000 to 0.03 per cent per annum.

Wraps are a type of investment platform that let customers hold all their managed funds and direct shares together and allow centralised tax and performance reporting.

Wealth groups, including the big four banks, have come under fire during the Hayne royal commission for charging hefty fees to customers in the superannuation and investments industry, while in many cases charging advice for services never received.

Last year, the corporate regulator started court action against NAB alleging it misled superannuation customers and wrongly pocketed $100 million in fees.

NAB’s fee reductions come as Josh Frydenberg is expected to today announce a date for the release of Kenneth Hayne’s final report into misconduct in the ­financial services ­sector.

NAB is also introducing lower administration fees for its retail MasterKey Super and Pension Fundamentals product for balances up to $200,000 to 0.3 per cent per annum. Fees for balances between $200,000 and $800,000 are being cut by five basis points to 0.2 per cent per annum.

The flat fee for balances under $50,000 falls to $78 a year, from $130.

New MLC chief executive Geoff Lloyd expects more than 200,000 clients will benefit from the lower fees under the flagged changes.

“Today’s announcement is one of the biggest fee reductions ever undertaken by MLC Wealth, and signifies the beginning of a new chapter for the business as we work to deliver products and services that are more transparent and affordable,’’ Mr Lloyd said.

“We want to lead the industry in winning back trust, and these pricing changes are an important step in showing our clients and their advisers that we have listened to them.”

Mr Lloyd, the former chief executive of Perpetual who took the reins as MLC boss in September, declined to be interviewed yesterday.

In response to a question on the timing of the fee changes given the proposed MLC divestment, the unit’s general manager for wealth and platforms, Sam Wall, said: “We have been undertaking a review of all our products and pricing across the business, and since Geoff has arrived that program of work has been accelerated. This is the second (the first being the review and increase of our cash rates on wraps) of a number of initiatives we will be rolling out over the next 12 months.”

At NAB’s annual results in November, group chief executive Andrew Thorburn said the MLC divestment would happen by the end of this year, subject to market conditions and regulatory approvals. He also left open the ­option of a trade sale.

Commonwealth Bank had been planning a similar separation of its wealth businesses last year before agreeing to sell its global asset management arm to Japan’s Mitsubishi UFJ Trust and Banking Corporation for $4.13 billion.

NAB has about $144.7bn in total funds under administration including asset management, with more than $65bn of that sitting across its retail MasterKey and wrap products.

The bank’s total wealth revenues have been under pressure and declined to $543m in the six months ended September 30, from $559m in the same period in 2017.

Research commissioned by NAB, but undertaken by Chant West, showed that for fees on a balance of $480,000, Westpac’s BT still came in the lowest at $1444, compared with the NAB Wrap Series 2 at $1683.