‘Not dishonest’

NAB chief admits fees for no service was wrong but ...

NATIONAL Australia Bank chief Andrew Thorburn has acknowledged it is taking too long to repay customers charged fees for services they never received.

But Mr Thorburn, appearing at the banking Royal Commission for the first time yesterday, has questioned the definition of ethics when asked whether the bank acted unethically by taking so long to make the repayments.

He was shown a note from the corporate watchdog, the Australian Securities and Investments Commission, regarding the bank’s remediation efforts.

The note, from November 2017, indicated NAB was “out of step” with other banks in continuing to argue about the methodology of repaying customers rather than simply getting on with the job of returning fees it should not have taken.

Counsel assisting the commission Michael Hodge, QC, asked Mr Thorburn whether “this was an ethical approach”.

Mr Thorburn answered: “Well, it depends what you mean by ethics.

“I think it ended up being too technical and too legal. But the way I think of ethics, I don’t think this was unethical,” he said.

“I do believe the outcome of it is that we have not earned our customers’ trust.”

Pressing the issue, Mr Hodge asked if, setting aside the word “ethical”, it was the right thing to do. Mr Thorburn said “no”.

On the broader fee-for-noservice scandal, which in- cluded NAB charging fees to dead people, Mr Thorburn did not accept that charging fees for a service the bank did not provide was dishonest.

He acknowledged such a practice was “wrong”.

“It’s absolutely wrong,” he said. But he added: “Dishonesty would go to the intent and I don’t feel it was dishonest in that respect”.

The Commission also heard that a memo to the NAB board in December 2016 raised that the scandal had “potentially significant implications, including potential revenue at risk and compensation payable under various scenarios”.

Mr Hodge asked if this was what drove the bank to drag its feet around methodology, as NAB was unable to track how much of the fee pool paid over a six-year period to financial advisers licensed to the bank — but not employed directly — was justified.

This could equate to $600 million if the bank paid back anyone in that category where records were unclear, he said. Mr Thorburn said he did not know “that specific number”.