NAB chief executive Andrew Thorburn has told the royal commission that the Financial Services Council is working on an "industry solution" after the CEO admitted to poor record-keeping of its four licensees.
At the Hayne royal commission hearings on Monday, counsel assisting Michael Hodge asked Mr Thorburn whether the move by retail banks such as NAB into other areas, particularly into wealth management, had been a failure.
“I think if you looked at the – I mean, if you looked at the raw – raw evidence, I would probably have to agree it had – had been. I don’t think it needed to be, but it probably has been,” Mr Thorburn said.
Questioning moved to the record-keeping of NAB’s four advice licensees, with Mr Hodge citing to Mr Thorburn the problems around applying a methodology for NAB Financial Planning and then applying that same methodology to its other licensees.
In particular, Mr Hodge noted NAB’s record-keeping issues around its more than $600 million in ongoing service fees through its licensees over a six-year period.
“The problem with the methodology is that the premise of the methodology you’ve agreed for NAB Financial Planning is that if you don’t have a record of service being provided, you’re going to refund the fees?” Mr Hodge said.
“Yes,” Mr Thorburn replied.
“The problem, if you tried to apply that over to your advice licensees, is that you just don’t have any records or very few records – inadequate records?” Mr Hodge asked.
“Well, I think we don’t know that yet. I think that’s the process we’re going through,” Mr Thorburn said.
When asked about a potential industry solution, Mr Thorburn said it was possible, citing the Financial Services Council as a key player in that solution.
“As I understand it, the FSC, Financial Services Council, which is often – sorry, not often – the amalgam of sort of advice type partnerships for the industry beyond the banks, this is a common issue. It’s a common question that has been put to them by [the] regulator, and clients and planners,” Mr Thorburn said.
“I think there is a view that if they could sort of agree that it’s done properly, thoroughly, professionally within the sector, that will cause the whole thing to be resolved in a much quicker way.”
“"I’m sorry, I’m still not sure I understand. What is the industry solution, though, to this problem?” Mr Hodge asked.
“Well, I don’t think they found it yet. I think that’s what they’re working through,” Mr Thorburn said.
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