NAB has revealed additional charges of $1.18 billion relating to increased provisions for customer-related remediation with a significant portion allocated to refunds of advice service fees.
Approximately 92 per cent of the remediation charges are for wealth and insurance-related matters, with the remainder for banking-related matters.
Charges of $832 million after tax for additional customer-related remediation will be included in NAB’s 2H19 result, according to a statement to the ASX.
NAB said the key driver of these additional charges is inclusion of a provision for potential customer refunds of adviser service fees paid to self-employed advisers.
The details behind NAB’s increased remediation costs include:
However, NAB also noted that until all customer payments have been completed, the final cost of the remediation remains uncertain.
“We understand that shareholders will be rightly disappointed. However, we also recognise the need to prioritise dealing with these past issues and fixing them for customers,” said NAB chief executive Philip Chronican.
“We have undertaken to significantly uplift customer remediation practices, as part of a broad program of reform to change the way we operate and ensure NAB meets customer and community expectations.
“We have made approximately 450,000 payments to customer with a total value of $202 million between June 2018 and August 2019, and have a dedicated remediation team of about 400 people helping to bring greater discipline and focus to remediating customers.”
The remediation expected to reduce 2H19 cash earnings by an estimated $1.12 billion after tax, and earnings from discontinued operation by an estimated $57 million after tax.
In combination with provisions raised in 2H18 and 1H19, NAB said this brings total provisions for customer-related remediation at 30 September 2019 to $2.09 billion.
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