NAB accused of withholding information from ASIC
National Australia Bank has been accused of delaying telling the corporate regulator the full extent of what turned out to be a $120 million customer refund so it did not look worse than other banks in an official report.
The banking royal commission heard on Tuesday that NAB had reassessed its refunds of a certain type of fee so the full figure would not be included in a report by the Australian Securities and Investments Commission (ASIC).
The revelation came as ASIC on Tuesday released its most recent update on its long-running program to ensure the banks are refunding customers who were charged fees for no service.
The new report found that AMP, ANZ Bank, Commonwealth Bank, NAB and Westpac have together refunded $222.3 million to consumers. A host of other financial institutions have also confessed to charging customers $259.6 million for services they did not receive.
ASIC said it expected banks and other financial institutions to make further provisions and warned in its most recent report that compensation could top $850 million.
At the commission hearing, NAB was grilled over how it provided information to ASIC for the 2016 version of that report.
NAB executive Paul Carter was taken to internal emails and reports by counsel assisting the royal commission, Michael Hodge QC, which showed that NAB hoped that if it capped its refunds at $87 million they would be “in the middle of the pack” in ASIC’s report.
Mr Hodge put to Mr Carter that if NAB had revealed the full extent of its refund program, “NAB would have been the worst of the banks in the report”. Mr Carter agreed, but said the boards of NAB’s super trustees and its wealth arm needed more time to discuss the matter.
Mr Hodge spent the morning going through NAB’s recent refunds of its plan service fees following on from Monday’s hearing where the royal commission heard Mr Hodge accuse NAB of classifying some fees as commissions to avoid refunds.
Mr Hodge quizzed Mr Carter on when NAB decided to disclose that its customer refund figure was much higher.
“No one said to ASIC that you were expecting an additional $34.7 million?” Mr Hodge asked.
Mr Carter pointed to a letter where NAB consumer and wealth boss Andrew Hagger said he would talk to then ASIC commissioner Greg Tanzer about the matter.
“I believe that was the exact intent of why Andrew Hagger reached out to a commissioner at ASIC, to discuss that issue ... I am not aware of what was discussed between Andrew and Greg Tanzer,” Mr Carter said.
Earlier on Tuesday, the royal commission heard that NAB had considered asking customers it had ripped off to “opt-in” to compensation by responding to a letter from NAB, rather than just providing the refund.
“Do you recall that you were pushing the opt-in approach?” Mr Hodge asked, to which Mr Carter replied: “I don’t think I was pushing."
“I wasn’t pushing any of these options. We were assessing the issues and the consequences.”
Mr Hodge said it was clear that NAB was looking to reduce its position on the table in ASIC’s report as the worst.
“The opt-in approach was that NAB needed to remediate less money, do you agree?” Mr Hodge asked.
Mr Carter said he agreed in principle with Mr Hodge’s proposition but denied that NAB was avoiding paying any compensation.
The hearing continues.