NAB admits to charging 4000 dead customers fees
The National Australia Bank (NAB) has become the latest financial institution revealed to be deducting fees from dead customers.
The claims were confirmed during the Royal Commission as the bank’s superannuation comes under scrutiny.
The former chair of NAB’s superannuation trustee Nulis, Nicole Smith, said the error was discovered after NAB went through its books in May, after similar allegations were made against the Commonwealth Bank in April.
NAB admitted charging more than 4000 dead superannuation customers advice fees.
NAB has also been accused of charging customers for no service, after some members were billed for financial advice when there was no adviser attached to their account.
Earlier, Ms Smith admitted there was a “conflict” when bankers behind the overcharging of fees were asked to review whether customers should be refunded for the error.
Counsel assisting the Royal Commission, Michael Hodge QC, is examining the case of NAB charging fees but providing no service, which has now seen customers being refunded up to $122 million.
Mr Hodge said there was a conflict that the people who had levied the fees were also being asked to recommend to the superannuation trustee board if there was a need to compensate customers.
“It is hopelessly conflicted isn’t it? If it is the one (doing the review) that has taken the money and has to pay it back,” Mr Hodge asked Ms Smith.
“Yes, there is a conflict in terms of the revenue,” she said.
When he continued on the point, Ms Smith said: “I believe it is conflicted — but not hopelessly conflicted.”
In 2016, NAB spent five or six months discussing ways to keep the wrongly charged fees from their superannuation members, although the bank denied trying to avoid the refund to customers.
Ms Smith claimed there was “appropriate representation” from the trustee working with NAB, outside legal advice and the review process was considered independent.
The commission heard that at one stage NAB proposed reviewing the delivery of services based on “fair exchange value”, not on whether the service had actually been provided to customers or not.
The Australian Securities and Investments Commission rejected the proposal.
Ms Smith agreed with ASIC, saying: “You can't charge a fee unless you've actually provided a service.”
During the commission, Ms Smith admitted that she did not challenge the bank on some of their internal processes which led to the scandal.