‘It’s a habit’: NAB chair not happy with ASIC dealmaking 

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NAB chairman Ken Henry says the bank’s habit of negotiating outcomes with the corporate regulator has led to “dysfunction” within the group.

Appearing before the financial services royal commission, NAB chairman Ken Henry questioned the necessity of negotiating remedial action for customers with the Australian Securities and Investments Commission.

Counsel assisting the royal commission Rowena Orr QC pointed to minutes of a board risk committee meeting held in 2015, in which NAB’s risk management team expressed “considerable frustration” with the “poor compliance record” of the bank, as well as the length of time taken to commence remedial action.  


Mr Henry said that after a potential compliance breach is identified by NAB, discussions regarding possible contraventions of the law, potential penalties and the bank’s overall response, are commenced. This takes place after the potential breach is reported to, and discussed with, ASIC.

Ms Orr asked: “So, the risk committee should be advised of these matters at an earlier point in time before the ASIC notification. Do you agree with that?”

Mr Henry replied: “I do. Indeed, I wonder whether it’s necessary, in all occasions, to negotiate with ASIC at all, rather than simply notify and get on and fix it.”

Responding to a question posed by commissioner Kenneth Hayne later in the proceedings, the NAB chair agreed that the bank should take “primary responsibility” in dealing with compliance breaches by “not waiting for ASIC” in the hope that the corporate regulator would reach the same conclusion as the bank.

“I agree with you 100 per cent,” Mr Henry said. “I think our habit – and it is a habit – of going to ASIC and seeking to negotiate an outcome with ASIC, I think, that has led to elements of dysfunction, and it has certainly contributed to an insufficient pace of remediation for customers.”

The NAB chair added: “I’m not happy with it, and the board is not happy with it. [We] do have to find a different mode of behaviour.” 

Mr Henry also agreed with commissioner Hayne’s assertion that the negotiation with ASIC leads to a mindset that seeks the “best deal” rather than the best outcome for customers.

“It’s not right,” Mr Henry conceded.

Further, making specific reference to the overcharging of fees to NAB’s financial advice customers, Mr Henry suggested that funding law suits from customers against the bank would have provided NAB with greater clarity regarding whether potential compliance breaches had contravened the law.

“I have wondered whether, in this case, NAB should not have, years ago, funded some of our customers to take us to this place, to this Federal Court and get an outcome.”

MS Orr interjected: “To sue NAB?”

Mr Henry continued: “Yes. It happens in other cases. As you know, I was, for 10 years, treasury portfolio secretary. The Commissioner of Taxation behaves in this way quite a lot. [The Commissioner of Taxation] has a budget to fund law suits against himself, in that case, to provide law clarification.”

Earlier this week, NAB CEO Andrew Thorburn also acknowledged that the bank’s remediation processes were “too slow”, acknowledging that the lender had treated remediation as “one of many tasks” undertaken by the bank and not as a priority. The seventh and final round of public hearings from the financial services royal commission continues.


‘It’s a habit’: NAB chair not happy with ASIC dealmaking 
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James Mitchell

James Mitchell

James Mitchell is the editor of the Wealth and Wellness suite of platforms at Momentum Media including Investor Daily, ifa, Fintech Business, Adviser Innovation and Wellness Daily.

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