NAB has come clean on a series of issues within its life insurance and superannuation arms, announcing plans to reimburse customers a total of $36.5 million.
The issues – which were self reported by the bank – has led the Australian Securities and Investments Commission to impose additional licence conditions on the bank including a review of its processes to be performed by KPMG.
Among the issues KPMG will look at are the bank's risk management procedures, process for implementing product changes, disclosure policies, member reporting and procedures for managing conflicts of interest within the bank.
Acting executive general manager of wealth products Garry Mulcahy said he supported the review as it would give customers further confidence in the business following a period of significant transformation.
Among the breaches identified at NAB was a breakdown in communication around life insurance policies between May 2013 and July 2015 which led the bank to decline or underpay ten policyholders a total of $1.6 million in benefits.
The bank has compensated these customers with interest, paying out $1.8 million. The policy changes impacted around 400,000 MLC customers.
The errors stemmed from a restructure that saw customers transferred into new products and changes made to death and total and permanent disablement (TPD) policies, leading to inadequate disclosures and assessments made by NAB staff.
A spokesman for the bank said in some instances the banks claims assessment team would refer to legacy policies rather than the new policies that were issued with larger benefits.
The Australian Financial Review also understands that new policies included tighter definitions which led to some claims being declined.
In a separate issue, NAB has agreed to reimburse over 220,000 members of its MasterKey Business Super and its MasterKey Personal Super customers $34.7 million after they were incorrectly charged fees for financial advice.
The fees for general advice were charged to NAB's MasterKey customers whether they received the advice – typically given in a town hall style presentation on the employer's premises – or not.
The bank first flagged the issues in October 2016 and customers are expected to be reimbursed approximately $150 each.
The breaches and confusion around are believed to have flowed from NAB's intention to streamline its super offerings, which culminated in the decision to merge its five super funds to create the $70 billion MLC Super Fund in 2016.
