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NAB customers get $110m compo
The Australian 12:00am March 13, 2019
Richard Gluyas
National Australia Bank has repaid a further $110 million to aggrieved wealth customers since June, as interim chief executive Phil Chronican amps up internal pressure to pay customers who are owed compensation “as soon as possible”.
In a letter to shareholders that coincided with the resignation of chief people officer Lorraine Murphy, Mr Chronican said he was aware of the “enormity” of the task confronting NAB. [Otherwise known to people with an adult vocabulary as ‘head of human resources’.]
“The royal commission is right,” he said. “There is a big gap between where we are and where we need to be.”
NAB, according to Mr Chronican, was stepping up the pace of remediation.
The $110m paid to 310,000 customers since June is part of the $314m in remediation provisions announced last October.
The bank’s disclosure follows a damning update from the Australian Securities & Investments Commission on Monday about the industry’s fee-for-no-service disaster, which remains a work in progress despite more than $1.1 billion in remediation payments.
ASIC commissioner Danielle Press condemned NAB, ANZ, Commonwealth Bank, Westpac, AMP and Macquarie Group for unreasonable delays in their customer reviews. Ms Press said the six institutions had failed to sufficiently prioritise and resource their reviews, given that ASIC had advised them to start investigating remediation as far back as mid-2015.
She welcomed the Morrison government’s plan to grant ASIC a directions power, which would enable it to direct companies to establish appropriate customer review and compensation schemes.
Last week, NAB announced that Mr Chronican would succeed Ken Henry as chairman later this year.
He became interim CEO on March 1, replacing Andrew Thorburn who, like Dr Henry, fell on his sword in response to adverse findings in royal commissioner Ken Hayne’s final report.
Mr Hayne slammed NAB’s culture, saying he was “not as confident as I would wish to be that the lessons of the past have been learned”.
A board committee chaired by non-executive director Ann Sherry is overseeing the search for a new CEO, with input from Mr Chronican.
Meanwhile, Ms Murphy, who joined NAB in 2016, has become the first member of NAB’s executive leadership team to leave the bank since the board upheaval.
Her departure comes in the middle of the bank’s aggressive transformation, which includes staff cuts of 6000 and recruitment of 2000 people with digital skills.
In a statement yesterday, she said that she had reached a “useful point of reflection” to consider other roles.
“It is important for the incoming CEO to have members of their leadership team who are utterly committed to the coming years,” Ms Murphy said.
Mr Chronican said Ms Murphy had laid the foundations for a customer-centric culture, rebuilding the human resources function from the ground up with “structure, policies and process”.
In his letter to shareholders, the interim boss said he was confident in the bank’s overall strategic direction.
“My expectation of the bank’s leaders is that they implement our strategy with greater accountability and focus,” he said.
“We also have to focus on earning back trust.
“That begins with making sure we fix the issues that caused our failures and we pay back customers who are owed compensation as soon as possible.”
NAB, he said, was confident the royal commission’s recommendations would lead to a better financial services industry, and NAB would lead the change that the community wanted to see.
The required work had begun, with NAB having set out a reform program last year for the way in which it wanted to operate.
“It will not be enough to focus on customers; we need to obsess about getting it right for them every single time.”
On the bank’s remuneration report, which earned a stunning 88 per cent “no” vote at last year’s annual meeting, he said NAB was changing the framework to ensure it provided the right balance of financial metrics, customer outcomes and management of non-financial risks.
The scheme would appropriately reflect the executive team’s individual and collective performance.