NAB’s Nulis gets ASIC tick on extra licence conditions

After copping a Hayne beating, NAB’s Nulis has been given a pass mark on the extra licence conditions imposed on it.

Former chair of NAB's superannuation trustee NULIS Nicole Smith (centre) leaving after giving evidence at the Hayne royal commission in 2018. Picture: AAP

National Australia Bank’s troubled superannuation trustee has emerged with a clean bill of health after implementing all of an independent expert’s recommendations on compliance and risk management practices.

The Australian Securities and Investments Commission imposed extra licence conditions on Nulis Nominees due to concerns about the trustee’s pattern of breach notifications in 2015 and 2016.

The reported breaches included failures in risk management and communication processes, including inadequate disclosure of insurance changes to members, a failure to update insurance policies, and inadequate training for staff.

The licence conditions required Nulis to engage an ASIC-approved independent expert, KPMG, to assess the adequacy of its compliance and risk practices for its retail and wrap superannuation funds.

Nulis accepted all of KPMG’s recommendations and reported to ASIC this month that it had implemented the recommended changes to policies and procedures covering governance and reporting lines, product redesign, training, risk management and managing conflicts of interest.

KPMG’s final report, released on Monday, summarised the series of reports it prepared for Nulis, in compliance with the extra licence conditions.

“Nulis has now met the requirements of the additional licence conditions,” ASIC said in a statement.

“ASIC remains engaged with Nulis as Nulis seeks to continue to improve its operations and address recommendations by the financial services royal commission.”

In the meantime, the watchdog is continuing its Federal Court action against two entities in NAB’s wealth management division, Nulis and MLC Nominees.

The court proceedings relate to fees charged by both entities to superannuation members for services that were not provided.

ASIC alleges that NULIS and MLC Nominees misled members of MLC MasterKey super products.

It claims NULIS and MLC Nominees deducted $33 million in plan service fees from 220,000 members of MLC MasterKey Business and MLC MasterKey Personal Super who did not have plan advisers.

NAB also deducted approximately $67m in plan service fees from 300,000 members of MLC MasterKey Personal Super, where plan advisers were not required to provide services and members did not receive services.

ASIC is also seeking declarations of contravention and a civil penalty.

The civil penalty action is part of ASIC’s broad-ranging investigations into fee-for-no-service failures in the financial services industry.

Between October 2016 and June 2017, Nulis repaid no-adviser members $35.9m, including interest and less fund tax of $6m.

Nulis also announced in July 2018 that it would refund linked members, with total remediation expected to be $87.1m, including interest and less $15m in fund tax.

At the banking inquiry, Commissioner Ken Hayne asked Nulis chair Nicole Smith whether there was ever any contemplation of criminal proceedings.

"Did you think yourself that taking money to which there was no entitlement raised a question of the criminal law?" Mr Hayne asked.

"I didn't," Ms Smith responded.

ASIC has said it has 86 royal commission-related investigations underway involving the big four banks and AMP.

It is also investigating potential breaches by 59 individuals as it seeks to accelerate its significant enforcement workload.

According to the regulator, 29 of the investigations relate to case studies explored by the royal commission, in addition to two cases under consideration by the Commonwealth Director of Public Prosecutions for potential criminal action.