National Australia Bank (NAB) has announced that it will set aside an additional $1.2 billion to compensate customers for overcharged fees and unneeded insurance, bringing NAB’s total provisions for customer-related remediation to more than $2 billion.
The charge follows last year’s banking royal commission which singled out NAB over accusations that top management had failed to accept responsibility for wrongdoing at the bank and comes about two months before the new chief executive commences in December.
NAB said the bill, which covered a provision for potential customer refunds of fees paid to self-employed advisers, higher refund rates for mis-selling consumer credit insurance, and about $348 million incurred in software capitalisation changes, is expected to reduce 2H19 cash earnings by an estimated $1.12 billion.
“We understand that shareholders will be rightly disappointed,” said Philip Chronican, NAB CEO. “However, we also recognise the need to prioritise dealing with these past issues and fixing them for customers. We have undertaken to significantly uplift customer-remediation practices, as part of a broad program of reform to change the way we operate and ensure NAB meets customer and community expectations.”
