Upfront commission removal not justifiable: NAB
NAB has claimed the lack of a “strong commercial” case for the removal of high upfront commissions is the reason for the bank's decision not to remove them from insurance advice.
Documents prepared by NAB in August 2014 – and recently tabled in parliament by Nationals Senator John Williams in parliament – have outlined how the bank had the “opportunity to take the lead” in the industry by removing high upfront commissions but decided against it.
“We would need a strong commercial case to do so which is not currently apparent,” the NAB papers said.
The documents highlighted the bank’s understanding that the removal of commissions from risk advice could lead to consumers being unwilling to seek insurance advice if they have to pay a fee.
“We recognise the tension between the potential consumer detriment of commissions and the likely reluctance of consumers to seek insurance advice if they have to pay explicit fees for it,” the documents said.
“[This] was the primary reason these commissions were exempt from the FOFA ban on commissions."
The documents also indicate the bank was addressing a series of “major incidents” that have occurred over the past five years within its advice network.
These incidents include those related to replacement insurance advice and the adequacy of resources being devoted to client complaints handling.
“In four of the cases we found that the adviser has reconstructed file records, or even forged client signatures so that the file would appear compliant,” the documents stated.
“We have suspended, terminated or ensured the resignations of 31 NAB FP and aligned advisers over the past two years due to conflicts of interest, inappropriate advice, inappropriate practices or serious or repeat compliance breaches."
Appearing voluntarily before the 'scrutiny of financial advice' inquiry last week, NAB Wealth boss Andrew Hagger revealed the bank had actually fired 41 employed or affiliated advisers in recent years.
Class action filed over grandfathered commissions
Major law firm Slater and Gordon has today filed a class action on behalf of 500...
AFSL forced to shut down robo-advice tool
A Sydney-based licensee has voluntarily shut down two digital advice tools follo...
Closing advice gap on ASIC’s radar for 2020
ASIC chair James Shipton says he is “acutely aware” of the growing shortfall...