NAB boss Andrew Thorburn grilled at hearing, asked: 'Are you living in the real world?'
Updated
"Are you living in the real world?"
Key points:
- Since 2009, 55 financial planners have left NAB because of poor conduct
- An ongoing investigation suggests many still received significant bonus payouts
- NAB boss Andrew Thorburn admits some cases were handled poorly
That was one question asked by an exasperated Matt Thistlethwaite, deputy chair of the House of Representatives' standing committee on economics, to NAB chief executive Andrew Thorburn today.
Mr Thorburn was responding to questions about the bank's financial planning arm and its practises, including how National Australia Bank (NAB) executives paid bonuses despite breaching codes of conduct.
He said an internal review found more than 1,100 staff members failed to meet the bank's code of conduct in the last financial year. In the 2016 financial year, that number was 1,138.
Fifty-five financial planners have left the bank since 2009 because of poor conduct.
"The consequences for those people ranged from a formal warning, through to dismissal," Mr Thornburn said.
"It also involves a reduction or elimination of any bonus. Of the 1,138, there were five senior managers. Two were dismissed and three faced other disciplinary action."
Wealth management scandals plaguing NAB
NAB said it was cracking down on unethical behaviour, despite failing to sack another senior executive involved in a wealth management scandal.
The bank's head of wealth, Andrew Hagger, has not been disciplined and still received a bonus, despite presiding over the division when 220,000 corporate superannuation accounts were overcharged.
Mr Thorburn said the issue did not constitute misconduct.
"One of the fees that we had was not properly, clearly disclosed and we said we should compensate our customers to the tune of $35 million for that error," he told the committee.
"This was poorly executed and we acknowledge that. It was poorly executed, but it wasn't misconduct."
The committee also heard that one victim, Veronica Coulston, received an inheritance and wanted to pay down a mortgage, but as the result of the advice of financial planner Graeme Cowper, she placed the inheritance into a fund with high fees and lost everything when the global financial crisis hit.
Ms Coulston received an initial compensation offer of $60,000 from NAB, but after media reports on her case she was offered a further $80,000.
"I think I met with Veronica Coulston. That was not a good case, the way we handled that, no doubt about that," Mr Thorburn admitted.
Mr Cowper was reported to ASIC and left NAB in 2009, and the bank has compensated $7 million to 102 of his clients.
He made $850,000 in one year, the committee heard, and the bank also signed a confidentiality agreement with him.
"You allow him to resign, you gave him a payout. I also understand you wrote him a very nice letter allowing him to do that. This is a man that you've admitted breached your code of conduct, and you allow him to resign and give him money? Are you living in the real world?" Mr Cowper said.
When asked about remuneration, Mr Thorburn said 85 per cent of staff received fixed pay. Of the 15 per cent who do get remuneration, 88 per cent of those people do not receive bonuses related to product sales targets.
"There's a small amount that's at risk, and that's where [NAB's internal audit report] comes in. But we have to work on it and get better," Mr Thorburn told the committee.
Topics: banking, business-economics-and-finance, company-news, government-and-politics, australia
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