Opening Statement, Senate Economics References Committee, Tuesday 21 April 2015
Mr. Andrew Thorburn, NAB Group Chief Executive Officer
Thank you Senator Dastyari, and thank you members of the Committee.
The National Australia Bank is pleased to appear before the Committee this afternoon. I would also like to thank you for agreeing to our request to appear before you in March.
I am joined here today by my colleague Andrew Hagger, the Group Executive for NAB Wealth and CEO of MLC to further the conversation on these important matters.
Leadership and culture
I have been in the role of CEO at NAB for nearly 9 months. When I took this role I knew our future success would be defined by our culture and the leadership we deliver for our people and our customers.
I am committed to this, and have high expectations of strong and authentic leadership that includes building an even stronger focus on our customers, doing the right thing, and on performance and accountability.
As part of that, we will be an organisation that is values led. Our vision is to be Australia and New Zealand’s most respected bank.
To achieve this, we and all of our people will live our values: This starts with having a passion for customers, respect for people, being bold, having the will to win and doing the right thing.
And so when we live our values and are accountable to our people and our customers – where we have issues, we must face into them. And we will.
I strongly believe that this committee and NAB have a shared goal – we all want Australians to be able to protect their wealth, live well in retirement and have access to the right financial advice for themselves and their families.
Our track record
National Australia Bank is a proud and longstanding Australian company. For over 150 years we have provided financial support and advice to retail customers and Australian businesses.
We have 12.7 million customers, employ over 45,000 people and have more than 500,000 shareholders. In 2014, we paid approximately $4.6 billion in dividends to largely Australian shareholders and we have paid $2.75b in Australian tax for 2014, making us the 6th largest tax payer amongst the ASX 200 companies.
Furthermore, our recent Retail Customer Satisfaction survey results, rate NAB customers as being 82.7% satisfied to very satisfied with the service we provide.
In addition our company has a proud track record of providing leadership in the financial advice industry.
In June 2009, the National Australia Bank and MLC went before the Parliamentary Joint Committee for Financial Services and Corporations and argued the case for a better structure and model for the Australian financial advice industry.
That Committee’s work, which came to be known as the Ripoll Inquiry, heard from NAB that the commission based “remuneration structure was holding the industry back”.
As part of this process we designed a new model which favoured fee for service payments over commissions noting that “trust and transparency will be the battleground for the next decade in financial services”.
MLC was the first major advice institution to make this change and we have been leading ever since.
We know that this work was instrumental in the design of the landmark Future of Financial Advice reforms and we believe that MLC was able to serve as an early proof point for these important reforms in the face of significant opposition.
Proud but not perfect
When Mr Hagger met with you in March he described our company as “proud, but not perfect” and that remains true today.
Proud because we have a long history of working with Australians to strengthen their financial security; ‘not perfect’ because there have been times when we have fallen short of our customers’ expectations and made mistakes.
Today, I repeat the apology Mr Hagger gave last month: I apologise to those customers who have received poor advice.
Our focus has been and remains the identification of impacted customers and proper compensation delivered in a timely manner.
Our commitment is to continue to do what is needed to improve our business and improve the outcomes for our customers.
Our customers demand it. We must deliver.
We have around 4,000 NAB Wealth staff; 1,662 advisers (aligned and FP); 1.7 million customers; 8.5 million operational processes are completed annually; Total Funds Under Management is $150bm+; And we have a complaints rate of less than 1%.
When we’ve needed to pay compensation, we have. From 1 January 2010 to 30 September 2014 we paid compensation to more than 750 customers, which has equated to $14.5 million.
But obviously we would prefer to be in a position where we are not paying compensation, because we’d rather our customers get the right advice, and good advice, every time.
Strengthening our processes
We have worked to strengthen our business, and while we don’t always get it right – we believe that our business is stronger today than it was 2 years ago, and that it will be stronger again in two years’ time.
In 2014, Andrew Hagger led a review as a result of the work that was undertaken by the Senate Economics Committee in 2014. We were assisted with this report by Deloitte, and this report was shared with our Principal Board, our Executive Leadership Team and our Wealth Leadership team. Our focus is on improving the customer experience, which is why the initiatives proposed in this report are being implemented.
Additionally, in February we committed to:
- Where there is professional misconduct we will move to write to all customers, and where misconduct has occurred in the last five years we will also write to customers.
- We are improving our complaints process, providing our customers with support to resolve complaints within 45 days.
- We believe that we need more independence. We are going to add independence into our whistle-blower process and our complaints process.
- We will advise ASIC of all advisers who leave our business, and the reason why.
I believe these reforms will make a strong customer service model even stronger.
Strengthening the system
We welcome the continued oversight of this Committee and we support a well regulated market.
We have been an integral part of this industry for over 150 years, we are committed to delivering quality service, and we believe that Australians can rely upon us to help protect and grow their wealth.
Senators, we are happy to take your questions.