In his opening statement to house of representatives standing committee on economics on Wednesday (27 March), NAB CEO Phil Chronican admitted that the royal commission was a “wake-up call” for the bank.
“Let me start by acknowledging that as a bank we have let down our customers. We have let down the community and we have let down our people on the frontline who do a great job, day in, day out, serving customers,” the CEO said.
“And for that, I’m sorry and I apologise to everyone who has been impacted by our failures.
“The final report of the royal commission was right when it said there was a gap between where we are, and where we need to be.”
Mr Chronican was appointed interim chief executive of NAB on 1 March following the resignation of CEO Andrew Thorburn and chairman Ken Henry.
“The royal commission was our wake-up call and it’s challenging us deeply in how we respond,” Mr Chronican said.
Like its big four peers, NAB has faced a steep increase in remediation costs. Since June, the bank has repaid $110 million to 310,000 customers.
Mr Chronican was questioned by Labor MP Matt Thistlethwaite around how the bank is being prosecuted under the Corporations Act 2001 by ASIC.
Mr Thistlethwaite said that based on the commentary he’s read, NAB has been filing defences saying that its behaviour is “flawed but not illegal”, and that “offering customers advice is just as good as providing it”.
“Is that still the position that NAB has on that defence or has that been changed?” Mr Thistlethwaite asked.
“The case is actually going into mediation, so it’s hard for me to comment on something which is going through the court process, but I believe that actually the contracts and the product that we’re talking about in the case, the offer of advice was what was actually promised. As I said, we have to work that one through and we’re in the middle of a court case with ASIC on it,” Mr Chronican responded.
Mr Thistlethwaite asked Mr Chronican about the distinction between customers who were either linked or unlinked to an adviser.
He responded that NAB has refunded both categories of customers, but that its behaviour is not illegal.
Mr Thistlethwaite then pointed out thatif NAB refunded the money, then implicitly it has recognised that it’s done the wrong thing.
“Doesn’t that make it illegal?” he said.
“I think there’s a big difference between giving customers their money bank and accepting that something is illegal. We refund customers fees and charges often even when we’re perfectly entitled to collect them,” Mr Chronican replied.
Now that the case between NAB and ASIC has entered mediation, Mr Thistlethwaite asked why the corporate regulator agreed to mediation, and why they didn’t just prosecute them.
“[It’s] a court-ordered mediation. And they’re a model litigant,” answered Mr Chronican.