Calls for advice royal commission reignited


By Julie May

Email Article Print Article

Pressure for a royal commission into the financial planning industry is mounting again following revelations that another of Australia’s banking institutions has become embroiled in an advice scandal.

The latest institution to be hauled over the coals by politicians and the media is National Australia Bank (NAB), which acknowledged in a statement on Saturday that it had paid out between $10 million and $15 million in compensation to over 750 of its wealth customers since 2009.

“Following the very high-profile scandals that have rocked the financial planning industry over recent years – Commonwealth Bank of Australia (CBA), Macquarie Private Wealth, Storm Financial, Timbercorp, Trio, Great Southern and Westpoint – issues within NAB is the last thing this sector needs,” a senior executive, who did not want to be named, told financialobserver yesterday.

“You’ve got the associations, institutions, insurance giants and independent groups scrambling to introduce measures that will increase professionalism and trust across the sector, but another controversy like this, it’s just one step forward, two steps back.

The source said it was “high time this royal commission into financial planning takes place", emphasising that the industry needed to do something about the systemic issues inherent in the industry.

Meanwhile, ASIC’s presence or lack thereof was a constant cause for concern, the source added.

“If NAB has been paying out millions of dollars to hundreds of customers, why hasn't the bank already made headlines like CBA and Macquarie? Why hasn’t ASIC made any mention of this? Do they live in constant darkness or, like some people say, have they kept quiet to protect the big end of town?”

News of misconduct in NAB’s wealth division emerged over the weekend, with speculation a number of planners had as a consequence left the group or been suspended.

NAB Wealth group executive Andrew Hagger said compensation was paid in situations where “we didn’t get it right the first time”.

“We have over 1.7 million customers and clearly we want our customers to get the right advice and good advice every time. But where we have problems we will face into them and fix them,” Hagger said in a statement.

“Our customers and our regulators hold us to high standards and so they should.”

Following the release last year of a Senate Economics References Committee report, he said NAB commissioned its own report into its wealth operations to review and determine whether it needed to change its standards for customers, employees and advisers, adding the bank performed audits regularly.

“We were transparent with this information, with our senior management team, the NAB principal board and our regulators,” he added.

ASIC yesterday told financialobserver it had set up a specialist wealth management project last year to focus on the conduct of the large advice entities, being the four major banks, Macquarie and AMP.

“This includes work that covers NAB Wealth's business [but] we cannot comment further on this work at this point in time,” it said.

« Back to Articles