Michael Hodge’s claims about Andrew Hagger’s actions raise NAB hackles

NAB has taken a moumental bank inquiry beating but will strongly contest assertions made in last week’s closing submission.

NAB's Andrew Hagger leaves the royal commission hearings into misconduct in the banking, superannuation and financial services industry earlier this month. Aaron Francis/The Australian

The extent of National Australia Bank’s exposure to scalp-seeking financial regulators should be clearer by the close of business on Friday, when the bank is due to respond to closing submissions in the superannuation hearings of the financial services royal commission.

NAB’s reputation has taken a monumental beating. Of that there’s no doubt.

However, the word on the street is that the bank — at the very least — will strongly contest assertions made by senior counsel assisting Michael Hodge that wealth boss Andrew Hagger showed “a disrespect for the role of the regulator and a disregard for the gravity of the events in question”.

NAB, according to Hodge, was not full and frank on members’ likely losses from wrongly imposed plan service fees, or the expected amount of remediation.

Instead, in a bid to minimise reputational damage, the bank was silent when ASIC asked if the figures in the breach report were accurate.

Hodge took a dim view of Hagger’s evidence that he “left the door open” for the regulator to ask the question.

As you’d expect given chief executive Andrew Thorburn’s intervention, NAB’s legal advice is solid on the issue of the bombshell question asked by commissioner Ken Hayne of Nicole Smith, the former chair of the bank’s superannuation trustee Nulis.

Addressing the continuing fees-for-no-service scandal, Hayne asked: “Did you think yourself that taking money to which there was no entitlement raised a question for criminal law?”

Ms Smith replied that she did not.

The exchange caused a meltdown at NAB.

Thorburn bombarded social and traditional media platforms, hosing down the idea of uniformed cops picking up the scent of fraud or theft and storming NAB’s headquarters in Docklands to execute search warrants. In that narrow sense, he was right.

Nowhere in his 222-page closing submission did Hodge argue the case for old-school theft — the focus, instead, was on Corporations Act-style misconduct, which can be criminal as well.

That means breaches of directors’ duties, such as falling short of the duty to provide financial services efficiently, honestly and fairly, or deducting plan service fees when there was no adviser linked to the member’s account.

It comes down to the age-old distinction between blue and white-collar crime, where the end result might be the same but the means are seen to be different.

This should be no solace to NAB, but in the current circumstances the smallest of victories tend to loom large.

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