NAB has released an update on the ASX, informing shareholders of additional costs for customer remediation matters.
The bank revealed that further charges of $525 million after tax ($749 million before tax) have to be absorbed by NAB in connection with increased provisions for its customer-related remediation program.
The costs are expected to reduce the bank’s cash earnings for the first half of the 2019 financial year (1H19) by an estimated $325 million and earnings from discontinued operations by an estimated $200 million.
According to NAB, approximately 91 per cent of the 1H19 charges are for wealth-related matters, with the remainder for banking.
The additional charges bring total provisions for customer-related remediation as at 31 March 2019 to $1.1 billion, when combined with provisions raised in 2H18 which have not yet been utilised.
The matters giving rise to increased costs for customer-related remediation include:
- Consumer Credit Insurance sales through certain NAB channels
- Non-compliant advice provided to wealth customers
- Adviser service fees charged by NAB Financial Planning (salaried advisers)
- Adviser service fees charged by NAB Advice Partnerships (self-employed advisers)
- Banking-related matters including provisions for incorrectly charged fees on certain fee exempt transactions
Following NAB’s announcement, CEO Philip Chronican said: “We are putting things right where we have treated our customers poorly and making sure that they are compensated more quickly.
“Since June 2018, we have made approximately 360,000 payments to customers with a total value of approximately $145 million.
“There are currently around 350 people dedicated to remediating customers, and we will soon have around 500 across NAB as we bring greater focus and discipline to resolving issues and making sure they do not happen again.”
NAB noted that further detail regarding its remediation costs will be outlined in its 1H19 results, set to be released on 2 May 2019.
Charbel Kadib is a journalist on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel held roles with public relations agency Fifty Acres, and the Department of Communications and the Arts.
Charbel graduated from the University of Notre Dame Australia with a Bachelor of Arts (Politics & Journalism).