NAB Wealth group executive Andrew Hagger has told a senate committee that a damning internal review of the bank’s advice practices is in fact a “demonstration of the health of our system”.
Mr Hagger, who is also the chief executive of MLC, spoke at a public hearing as part of the Senate’s ‘Scrutiny of financial advice’ inquiry in Melbourne on Friday.
The hearing was called after a compliance document entitled ‘NAB Wealth Advice Review’, authorised by Mr Hagger, was made public by Fairfax on February 21.
The leaked document revealed that misconduct by advisers in recent years has resulted in NAB compensating between $10 million and $15 million to 750 clients.
One senator put it to Mr Hagger that he had asked the committee to “take it on trust” that NAB has put processes in place to prevent further misconduct by its advisers.
“It’s hard to grant this trust to you when your own documents talk about the fact that you’ve suspended, terminated or ensured resignations of 31 NAB financial planners and aligned advisers over the past two years,” the senator said.
The removal of the advisers was down to conflicts of interest, inappropriate advice, inappropriate practices and a “series of repeated compliance breaches”, said the senator, citing the NAB report.
“How can we do anything other than form the view that there’s a systemic problem within the company, and there needs to be an independent review to clear the air?” the senator asked.
In response, Mr Hagger said “that’s actually a demonstration of the health of our system”.
“This was an internal document – it was not written for public consumption. The point that I’m making to you is that it’s part of a healthy system,” he said.
“At some point in time there will be an adviser who does the wrong thing. And the mark of a good organisation is what you do at that time."
Mr Hagger said the bank will compensate any other clients who are found to have received inappropriate advice.
One sticking point throughout the hearing, however, was the identity of the eight planners who were the subject of breach reports submitted by NAB to ASIC.
Mr Hagger refused to name the eight planners other than to acknowledge that one of their number was Graeme Cowper, who has since moved to AMP licensee ipac and is now on ‘gardening leave’.
Mr Hagger also revealed that NAB/MLC is undertaking a ‘shadow shop’ of its advice practices.
The number of advisers who have been forced to leave the NAB group was also under dispute, but Mr Hagger said 41 financial planners had left the business – including the eight who were the subject of breach reports.
However, the leaked document refers to 31 NAB financial planners, while the Fairfax press has reported a total figure of 37 (including aligned planners).
The discrepancy between the numbers quoted in the media and the figure held by ASIC led the corporate regulator to ‘serve notice’ on NAB last week, Mr Hagger said.
Investors should be looking to increase allocations to defensive assets this year, with relations between the US and China contributing to m...
Rapid changes in the financial sector are opening opportunities for investors, with the introduction of open banking and digitization to acc...
Australia’s competition watchdog is proposing to accept an application for a certification trademark that signals to potential investors t...