Retirement
Multi-million payout set for customers of major bank
One major bank announced it will pay out over $310 million after tax to its customers, in a bid to address the impact of its poor advice.
Multi-million payout set for customers of major bank
One major bank announced it will pay out over $310 million after tax to its customers, in a bid to address the impact of its poor advice.
The National Australia Bank will fork out for refunds and compensation to customers impacted by issues in NAB’s wealth business, including adviser service fees and other wealth related issues.
Further costs are due to implementing remediation processes and various costs associated with regulatory compliance matters.
NAB chief executive Andrew Thorburn acknowledged the bank has let its customers down.
“Where we have let customers down we are determined to put things right. We have made good progress in resolving a number of issues that impacted our customers and we want to compensate them as quickly as possible,” he said.
Bottom line impact
The cost of this exercise will reduce NAB’s 2018 cash earnings by an estimated $261 million and earnings from discontinued operations by an estimated $53 million.
Of the cash earnings impact, approximately 69 per cent will impact revenue, with the balance reported in expenses.
These additional costs will be excluded from the 2018 financial year expense growth guidance, which also does not include costs associated with responding to the royal commission.
Crisis mode
NAB is the latest financial services institution to announce reparation measures in the wake of the banking royal commission.
Last week, ANZ announced a $374 million hit to its profits as part of its refunds to customers and related remediation costs. The compensation was ordered for, among other items, customers receiving inappropriate advice or for services not provided with former aligned dealer groups.
This followed the release of the banking royal commission’s interim report, after which federal Treasurer Josh Frydenberg hinted at major changes for the financial services legislative and regulatory landscape in Australia.
“Banks and other financial institutions have put profits before people. Greed has been the motive. Short-term profits have been pursued at the expense of basic standards of honesty,” Mr Frydenberg said late last month.
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