Australia’s NAB reviews advice business as inquiry exposes banking misconduct

SYDNEY: National Australia Bank (NAB) said yesterday it is reviewing options for its financial advice business, as a major inquiry into the country’s financial sector continued to reveal widespread misconduct by advisers with the big banks.

Andrew Hagger, a member of NAB’s 11-strong executive leadership team, said the bank was “continually looking” at its portfolio mix as he responded to questions at the inquiry about the future of its financial advice business model.

Facing mounting regulatory pressure and public disgust at their abuse of market power, Australia’s major banks are increasingly moving to exit noncore businesses with high compliance risks, such as wealth management.

“NAB is continually looking at our overall portfolio, but ... there’s no announcement to make here today,” Hagger told barrister Rowena Orr assisting the Royal Commission inquiry into the financial sector.

NAB’s wealth management assets are worth about A$4 billion (RM11.7 billion), according to Citigroup analysts.

Commissioner Kenneth Hayne, whose recommendations at the end of the year-long inquiry could include tighter rules for financial planning, pressed Hagger about an internal NAB document from 2017 talking about the need to review the “business model associated with aligned advisers”.

Hagger said that legislation in 2012 designed to ensure financial planners acted in the best interest of clients had changed the “risk-reward equation” for NAB and made it less attractive for “big organisations” to remain in the business.

NAB has admitted to the inquiry that some of its advisers had engaged in dishonest and illegal conduct such as misappropriation of client funds. It has paid A$19 million in compensation to customers, Haggard said. – Reuters