NAB trustee in ASIC probe, wealth GM moves

03-Feb-2017

By Leanne Abbas

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ASIC has imposed additional licence conditions on the Australian financial services licence (AFSL) of NULIS Nominees Limited (NULIS), a National Australia Bank (NAB) superannuation trustee, following what the corporate regulator termed “the breakdown of internal procedures”.

The conditions would require NULIS to undergo a review of its compliance and risk management practices for its retail and wrap super funds by an approved independent expert.

NULIS has agreed to the conditions and KPMG has been appointed to develop the review, with findings to be reported in July.

NAB acting executive general manager of wealth products Garry Mulcahy said the group would support the assurance review.

“It will give our customers further confidence in the systems and processes supporting our superannuation business, following a period of significant transformation,” Mulcahy said.

“Over the past five years, we’ve made substantial changes to upgrade and simplify our superannuation business to better serve our customers’ needs,” he added.

The conditions were imposed following ASIC’s inquiries into a breach report lodged by NAB’s wealth entities, which involved a breakdown in risk management and communication procedures following the transfer of members in a number of products to MLC MasterKey Business Super (MKBS) and MLC MasterKey Personal Super (MKPS) in 2012 and 2013.

The report also found incorrect death and TPD (total permanent disability) insurance tests were applied to about 400,000 MKBS and MKPS members between 2013 and 2015, resulting in changes to the members’ insurance that were inadequately disclosed.

According to the report, 10 members’ insurance claims were also incorrectly assessed, costing about $1.6 million in underpaid and declined claims.

Furthermore, 220,000 member accounts were incorrectly charged service fees of about $34.7 million between September 2012 and October 2016 in the MKPS and MKBS products, while some members were also charged for the provision of general advice in circumstances where no adviser had been appointed to provide such advice.

KPMG will review NULIS’s risk management procedures, the process for implementing product changes, disclosure and reporting to members, and procedures for managing conflicts of interest within NAB’s super business, including the assessment of related party service providers.

Meanwhile, the bank confirmed Paul Carter, Mulcahy’s predecessor, would take up a new role as director of retail and marketing at NAB subsidiary Bank of New Zealand.

Carter, who has been with the bank since 2008 and was executive general manager of wealth products, had a key role in the merger of eight NAB super funds to form Australia’s largest retail fund last July.

A NAB spokesperson said the bank was recruiting Carter’s permanent replacement.

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