NAB grilled for not terminating rogue adviser
NAB chief executive Andrew Thorburn was pressed last week by MPs over the bank’s handling of a former financial adviser, who apparently received a hefty payout when he resigned after being caught giving poor advice.
Fronting the House of Representatives Standing Committee on Economics on Friday, Mr Thorburn was asked several times about who was made accountable for certain scandals arising out of the bank’s wealth division.
Labor MP Matt Thistlethwaite wanted to know why Graeme Cowper, a former financial adviser who gave inappropriate advice to more than 100 clients, was allowed to resign, rather than be terminated.
Mr Cowper also apparently received a large payout when he left, Mr Thistlethwaite said.
"You allowed him to resign and gave him a payout. I also understand you wrote him a nice letter. This is a man you admit breached your code of conduct, you allowed him to resign and gave him money – are you living in the real world?" Mr Thistlethwaite asked.
Liberal MP Julia Banks also asked Mr Thorburn what kind of message he believes this sends out to the other 33,000 employees at NAB.
Mr Thorburn responded by saying the bank can’t control when people resign, without going into specifics citing legal reasons.
He added that NAB’s standards, in relation to misconduct, have been lifted since Mr Cowper left.
“We do have a process where we investigate people, and sometimes people resign before that is completed,” he said. “We can’t hold people. They can leave.”
“Cowper was a really bad case. He did the wrong thing. We didn’t handle it as well as we could have. It was between 2009 and 2015. I think people will be looking at our standards today.”
Mr Thorburn was also grilled on why no disciplinary was ever taken against Andrew Hagger, who was NAB Wealth’s group executive when certain scandals occurred.
Last month, ASIC announced NAB would have to pay out $34.7 million to clients for charging incorrect advice fees.
Committee chair Liberal MP David Coleman said, “What I want to understand is whether Mr Hagger has experienced any consequences from all of these quite serious issues that have taken place in the division that he has been running.”
Mr Thorburn went on to defend Mr Hagger, saying the bank is satisfied with his performance.
“When Andrew Hagger came in, most of the issues already existed. He went in to lift the standards, and he had done so,” he said.
“I think Mr Hagger has been part of the reason why I can sit before you today feeling a lot more confident that the processes, the standards and the risks management in our business are much higher than ever before.”
The question of accountability at NAB follows after the committee put forth recommendations to the big four banks last year, with one relating to the need for a public breach reporting system.
Asked whether breach reports should be made public, NAB’s written response suggested that such a change could act as a “disincentive” for employee to make breach reports.
Mr Thorburn said he believed the “current framework” and the “steps [NAB] takes” are “sufficient”.
“We are working with the industry on the so-called 'bad apples' register. We are working together with regulators and the industry and other banks to do that,” he said.
Mr Thorburn said the fact that 1,138 NAB employees are facing consequences for misconduct that has been uncovered in 2016 is a demonstration that they're taking this seriously.
The committee’s hearings will continue tomorrow with the appearances of CBA chief executive Ian Narev and ANZ chief executive Shayne Elliott.
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