NAB pays $6.5 million in compensation for bad advice
Part of the bank's response initiative to complaints dating back to 2009.
National Australia Bank (NAB) has paid $6.5 million in compensation to more than 250 customers since February 2015, relating to concerns they may have received inappropriate advice since 2009.
The compensation payments follow the Australian Securities & Investments Commission's (ASIC) Wealth Management Project, established in October 2014, designed to review and raise the standards of Australia's major financial advice providers.
Since the project's inception, ASIC has undertaken a number of investigations, conducting proactive risk-based surveillance and, as a result, banned more than 15 financial advisers from the industry.
NAB's payments are part of the bank's Customer Response Initiative. Key elements of this enterprise include NAB's commitment to respond to all new customer complaints within 45 days and add independent measures to the complaints and whistleblower process.
KPMG was appointed to help design the initiative and Deloitte was contracted to review and report on it's progress. An independent customer advocate for wealth advice was recruited and customers are now offered $5000 to source their own additional independent financial advice.
When NAB last provided an update on its Customer Response Initiative in October last year, the bank had made $1.7 million in compensation payments to 87 customers.
As of June, Commonwealth Bank of Australia (CBA) had completed around a third of its advice review program for victims of poor financial advice, offering $7.8 million in compensation to 571 customers.
These payments are the latest in a slew of industry-wide banking reimbursements and reparations. Earlier this month, CBA coughed up $180,000 in penalties for breaches relating to personal overdraft facilities.
Earlier this month, ING handed over $5.38 million to around 24,500 members after acknowledging some of its promotional material was potentially misleading, while ANZ refunded $28.8 million in fees to retail and business bank customers after charging unnecessary periodical payments.
These decisions highlight the importance of selecting a bank account that minimises fees and costs.