The royal commission has heard NAB failed to provide ASIC with up-to-date information about its ‘fees for no service’ compensation program as the regulator was compiling an industry-wide report on the topic.
NAB’s chief customer officer for consumer and wealth, Andrew Hagger, appeared before the royal commission hearings into superannuation yesterday in response to a summons he received on Friday.
Mr Hagger previously appeared before the royal commission in April, when he gave evidence about the “widespread” practice of false witnessing by NAB financial advisers.
In yesterday’s hearing, Mr Hagger was questioned by counsel assisting Michael Hodge about information relayed to ASIC in October 2016 about NAB’s remediation of non-advised clients who were charged ‘plan service fees’ (PSFs).
The total amount NAB estimated it would have to compensate to clients was “approximately $34 million”, Mr Hodge established, but ASIC was told the total amount was $16.2 million.
Mr Hodge directed Mr Hodge to email correspondence with NAB head of regulatory affairs for wealth, Andrea Debenham, who wrote in October 2016 that the $16.2 million figure would probably mean that NAB is “middle of the pack” in comparison with its peers rather than an “outlier”.
Mr Hagger repeatedly refused to accept that either he or NAB ought to have voluntarily told ASIC that the correct figure was $34 million for members across NAB products TERP (‘the employee retirement plan’), SWiFT and Encompass.
Mr Hagger spoke to then ASIC commissioner Greg Tanzer on the phone on 21 October 2017, and told Mr Tanzer in a “roundabout” way (according to Mr Hagger’s filenote of the hour-long conversation) what the total remediation amount was.
“You knew that if they knew the amount of compensation and updated it, that NAB’s position in the ranking of entities [in the ASIC report] would likely rise?” asked Mr Hodge.
“Well, there’s an assumption in your question saying if I knew if they knew. I think I’ve been clear that I’ve had a conversation with him before, and I opened the door for him to ask,” Mr Hagger said.
Later that week on 27 October 2016 ASIC published its Report 499 Financial advice: Fees for no service, which listed NAB’s total (estimate) of compensation as $16.9 million plus interest (below the more up-to-date figure of approximately $34 million).
On the same day, Mr Hodge noted, NAB released its end of financial year results.
The hearings continue.
You can follow the royal commission hearings on InvestorDaily's live blog: https://www.investordaily.com.au/superannuation/43410-royal-commission-superannuation-hearings
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