NAB’s behavior under the board of Ken Henry has been disastrous, Adele Ferguson:
It doesn’t get much worse for a bank to be told that it has a “total disregard” for the law and regulators…But so it was for National Australia Bank…in the closing submission from counsel assisting the Hayne royal commission into the fifth round of its inquiry which focussed on superannuation.
The disgust was palpable.
“It is open to the commissioner to find that the misconduct in respect of plan service fees, adviser service fees and grandfathered commissions may be attributable, at least in part, to the culture and governance practices within the NAB group,” the findings say.
Ken Henry’s tenure at the bank spans these activities and findings. Yet his fine record of pubic service also helps disguise them. Given the findings also include the disastrous capture of both regulators, ASIC and APRA, how can Ken Henry’s position be tenable as a former public servant with immense clout?
This is your chance to redeem the great mistake of your career, Mr Henry. Fall on your sword. Give the public back the belief in accountability without which there is no sustainable context for markets and society to coexist.
Resign, Ken. For yourself so that you can sleep at night. And for your country which you served so well at Treasury.
Do it for a fine public service legacy that does not deserve to slide into ignominy. Banking Day legend Ian Rogers nails it:
The royal commission’s impatience with NAB is palpable, suggesting it may not just be Andrew Hagger – named and shamed on Friday – but his CEO, Andrew Thorburn and the chair of the board, Ken Henry, whose swift exits from the bank look a real prospect.
Two of Australia’s biggest wealth managers, including NAB, displayed “a lack of insight into why certain conduct is unacceptable,” the Hayne royal commission has been told by its chief advisers.
There was, it is said, “a disregard on the part of the NAB Group for members of the relevant superannuation funds, for regulators and for the law.”
In a harsh assessment of topics gathered under a heading of “culture and governance”, counsel assisting the commission use blunt language that must leave a question mark over the continued employment of a couple of very big names in Australian finance.
“To what extent ought it be concluded that the lack of insight is a reflection of leadership within the organisation,” the counsels assisting ask of Andrew Hagger, from NAB and Chris Kelaher, from IOOF.
The commission’s impatience with NAB is palpable, suggesting it may not just be Hagger but his CEO, Andrew Thoburn and the chair of the board, Ken Henry whose swift exits from the bank are a real prospect.
“Even now, NAB has not agreed to test whether four of its five licensees have provided the services that it had contracted to provide in exchange for the fees it had charged its customers.
“It cannot be satisfied that the Group has a legitimate basis for retaining all of those fees. No witness from NAB demonstrated insight into why this situation is unacceptable.”
This the fiery background to declarations by counsel assisting that “the evidence suggests a divergence between entities in terms of the level of insight of senior figures” making clear those in the frame for most scrutiny were “Mr Kelaher of IOOF and the witnesses from NAB.”
NAB supplied the most colourful material, and these findings from the end of last week must reverberate in the capital market this week.
Andrew Hagger, NAB’s chief customer officer, along with two subordinate executives, “demonstrated a lack of insight into the problems with the conduct of NAB Wealth and the trustee and an unwillingness to acknowledge problems with the behaviour of the entities for which they were responsible,” counsel advised the commissioner, Kenneth Hayne.
They said this “included behaviour that had continued until recently or in a few cases still continues.”
The counsel told Hayne that “NAB’s behaviour over the last few years must be assessed as a whole,” then summarised the rap sheet.
NAB’s “continued failure to agree to assess whether services had been provided in exchange for fees for four of its five advice licensees.”
The bank’s “refusal over more than two years to carry out a proper review of whether its other licensees had provided the contracted services in exchange for fees paid by clients.”
Its “attempts to find a basis over several months in 2016 not to make full remediation to members who had paid fees, but had no linked adviser”.
The NAB group’s “failure to be open and transparent with ASIC in October 2016 about its estimates for remediation of the plan service fees [and] its conduct in preparing, and having signed by [the trustee], letters to ASIC that asserted incorrectly the nature of the service contracted to be provided in exchange for fees”.
NAB’s “failure to assess whether it should refund adviser contribution fees despite this issue having been raised internally in 2015”.
Its “failure to assess whether it should refund employer service fees despite this issue having been raised internally in 2015”.
And its “failure to carry out any assessment of whether contracted services were provided in exchange for fees charged to MLC members [and] its failure to refund fees to these members, despite the evidence demonstrating that the same kind of misleading statements were made”.
NAB’s “failure to comply at least 84 times with section 912D(1B) Corporations Act between 2014 and 2017. and the ongoing failure of the trustee to intervene and insist that the NAB Group act in the interests of the members of the superannuation funds for which NULIS is the trustee.”
In restrained language, the counsel concluded that, “assessed as a whole, it is submitted that this behaviour indicates a disregard on the part of the NAB Group for members of the relevant superannuation funds, for regulators and for the law.”
