Australia's NAB to pay another A$478m in wealth-related remediation

Pedro Gonçalves
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Australia's NAB to pay another A$478m in wealth-related remediation

National Australia Bank has flagged an additional A$749 million ($537.18 million) in charges to refund thousands of wronged customers, with 91% of it going towards wealth-related matters.

The A$525 million (after tax) is for 1H19 and in addition to A$145m already paid out to customers since June 2018 and provisions already made in 2H18 that have not yet been distributed. The total owing is now estimated at more than $1.1bn.

"We are putting things right where we have treated our customers poorly and making sure that they are compensated more quickly. Since June 2018, we have made approximately 360,000 payments to customers with a total value of approximately $145 million," NAB chief executive Philip Chronican said.

We are putting things right where we have treated our customers poorly and making sure that they are compensated more quickly"

"There are currently around 350 people dedicated to remediating customers and we will soon have around 500 across NAB as we bring greater focus and discipline to resolving issues and making sure they do not happen again."

Of the 1H19 charges, about 91%, or A$478m, are for wealth related matters, with the remainder for banking.

The inquiry has put banks and investment firms under pressure to clean up processes that led to customers being automatically billed for wealth management advice they did not receive.

NAB was singled out by the inquiry for an apparent unwillingness by its executives to accept responsibility for past wrongs, which resulted in the resignation of its CEO and chairman.

NAB said the key items giving rise to increased provisions include non-compliant advice provided to its wealth customers; adviser service fees charged by NAB Financial Planning salaried advisers; and adviser service fees charged by NAB Advice Partnerships advisers.

A former National Australia Bank financial adviser, Max Kiattisak Eung, has been charged with obtaining financial advantage by deception, following an investigation by the corporate watchdog.