NAB details serious compliance concerns in RC advice submission

In the past nine years NAB has identified about 70 financial advisers giving rise to serious compliance concerns across its wealth division.

In its submissions to the Royal Commission, NAB disclosed that between 1 January 2009 and 1 January 2018, it identified 68 advisers engaging in the provision of inappropriate advice.

The bank identified multiple instances of misconduct leading to financial loss by customers, including backdating of documents, misleading statements and repeated compliance breaches.

Over the same period, NAB identified other instances in which customers were provided with inappropriate advice which lacked a reasonable basis for the advice and failed to act in the best interests of the clients.

Special Counsel Assisting Rowena Orr said this included an unspecified number of instances of failing to provide advice tailored to the customers objectives or risk tolerance; an unspecified number of recommendations of an inappropriate geared strategy; and an unspecified number of failures to recommend withdrawal from a geared financial product during a cooling off period when the customer's circumstances had changed.

NAB also identified an unspecified number of other instances where customers had been provided inappropriate insurance advice. Examples included insurance advice that didn't take into account the customer's personal circumstances, including advice that resulted in a customer being uninsured.

There were also cases of insurance being cancelled before new policies had taken effect and recommendations for insurance switching that didn't benefit the customer.

Instances of dishonest or illegal conduct were also cited, such as misappropriation of funds and advice to invest in a company in which the adviser had a financial interest. Involvement or potential involvement of advisers in inappropriate early release schemes was also disclosed.

NAB told the Royal Commission that between 1 January 2010 and 30 September 2017, it paid or offered to pay about $38 million to customers, including unspecified amounts owed due to adviser misconduct.

NAB also admitted to charging a significant amount in fees for no service. It wrongfully charged adviser service fees between 2008 and 2015 as well as plan service fees between September 2012 and January 2017 in circumstances where no adviser was allocated to the client.

As at 31 January 2018, NAB has agreed to pay approximately $6.6 million in compensation to more than 25,000 clients impacted by misconduct in regards to adviser service fees and $35 million in compensation to more than 220,000 customers wrongfully charged plan service fees.

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