Royal Commission



15 March 2019

NAB takes action on recommendations from Royal Commission

National Australia Bank today detailed its response, including a range of actions, to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Group CEO Philip Chronican said NAB supported 72 of the recommendations and would work with Government and regulators with a view to taking positive action as quickly as possible on the remaining areas, which relate to broker arrangements, definition of small business and BEAR accountabilities.

Mr Chronican said NAB had completed or was in the process of implementing 26 of the recommendations. Some changes were announced ahead of the release of the Final Report, including –

  • announcing in July 2018 that NAB will not charge default interest to agricultural customers impacted by drought;
  • announcing a Board Customer Committee to better oversee NAB’s processes to ensure fair products and service outcomes and to evaluate customer feedback and complaints, and;
  • removing grandfathered commissions for NAB Financial Planning advisors.

NAB has also decided to extend the protections of the Code of Banking Practice to small businesses with less than $5 million in total borrowings, up from the previous agreed level of less than $3 million.

“The Royal Commission’s recommendations will help lead to a better, more customer-focused industry as organisations change in response. The Commission has also rightly challenged NAB to close the gap between where we are today and where we need to be,” Mr Chronican said.

“We have to focus on earning back trust and this includes the actions we take in response to the Final Report and other issues we have faced at NAB.

“It includes how we compensate customers when we get it wrong; how we pay our people; how we hold ourselves accountable for running the bank and; how we build a culture that puts customers first every time.”

NAB’s response to each of the Royal Commission’s recommendations is outlined below.



NAB supports the Final Report of the Royal Commission and believes it will lead to a better, more transparent financial services industry that is focused on getting it right for customers. The Royal Commission challenged NAB to close the gap between what we say and what we do – and today we provide an update on the actions we are taking to achieve that.

NAB agrees with 72 of the recommendations in the Royal Commission’s Final Report and will seek clarity from the Government and regulators on the other areas with a view to taking positive action as quickly as possible.

We have completed or are in the process of implementing 26 of the recommendations.  In some cases we have made improvements ahead of the Final Report. These include stopping charging default interest to farmers impacted by drought, removing grandfathered commissions for our NAB financial planning advisers and implementing the Retail Banking related Sedgwick review recommendations well ahead of schedule.

We have started the work to restore trust and make our organisation a better one for customers with a strategy to simplify the bank and its products and services.  Last year we set out a reform program based on the APRA self-assessment process, which we released publicly last November.  The program shapes how we want to operate and focusing on culture, accountability and governance.  It has 26 clear actions around five core themes –

  1. Bringing the voice of the customer back into the bank
  2. Improving rigour and discipline in delivery
  3. Improving accountability
  4. Addressing issues and remediating customers
  5. Achieving our desired culture

NAB has established a Board Customer Committee, led by Ann Sherry. This committee met on 5 March 2019 and will oversee a significant improvement in the importance given to the voice of the customer in our decision-making and a more intense focus on customer outcomes at NAB.

The Royal Commission’s Final Report and our own reform program set out a clear way forward for NAB to earn the trust and build a culture which puts the customer first.

Further details on our progress on the Royal Commission recommendations are in the tables below.

NAB agrees with 13 of the 17 recommendations.

Recommendation NAB’s position
1.1 Amendment of National Consumer Credit Protection Act Agreed – NAB agrees with the recommendation that the National Consumer Credit Protection Act (NCCP Act) should not be amended to alter the obligation to assess unsuitability.
1.2 Mortgage Brokers Best Interest Duty Agreed – NAB believes Mortgage Brokers must always act in the best interest of the intending borrower.
1.3 Mortgage Broker Remuneration and 1.5 Mortgage Brokers as Financial Advisors NAB will work with the Treasury-led working group to ensure that the broking industry remains viable, customers have choice and get the best possible outcomes.
1.4 Treasury-led working group Agreed.
1.6 Mortgage Broker Misconduct Agreed – NAB is implementing governance frameworks that are directed at more readily identifying and addressing poor behaviour and poor customer outcomes.
1.7 Removal of Point of Sale Exemption Agreed – although not applicable to NAB.
1.8 Access to Banking Services Agreed – NAB will work with the industry to amend the Banking Code in line with this recommendation, and is committed to supporting access to banking services for Indigenous customers, those in remote locations, and those who are not adept in using English.
1.9 No extension of NCCP Act to small businesses Agreed.
1.10 Definition of “small business” NAB supports the intent to expand the definition of small business, and, will expand our definition from aggregate borrowings of less than $3m to aggregate borrowings of less than $5m.
1.11 Farm Debt Mediation Scheme Agreed – As Australia’s largest agri-lender, NAB has been a long-time supporter of such schemes.  NAB will actively support the establishment of and participate in a National Farm Debt Mediation scheme.
1.12 Land Valuations Agreed – NAB is implementing changes to ensure that land valuations are conducted independent of the loan origination, processing and decision processes.  These changes will be implemented by 30 June 2019.
1.13 Charging default interest Agreed NAB announced in July 2018 that it will not charge default interest to any agri-customers impacted by drought.


We are reviewing our approach to default interest for all borrowers.

1.14 Distressed Agriculture Loan Management Agreed – NAB has always had specialist agri-bankers. NAB supports the recommendations associated with dealing with distressed loans.  NAB has a specialist agri-banking unit within our Specialised Business Solutions team.  NAB only appoints receivers at the last resort.
1.15 & 1.16 Enforceable Code Provisions Agreed – NAB will proactively work with the Australian Bankers Association (ABA) to implement any changes to the Code.
1.17 BEAR – Product Accountabilities NAB has allocated responsibility to specific Accountable Persons for each step in the design, delivery and maintenance of all products offered to customers by NAB and any necessary remediation of customers in respect of any of those products.  NAB will address this recommendation, in consultation with APRA, as part of any regulatory change.


NAB agrees with 10 of the 10 recommendations.

Recommendation NAB’s position
2.1 Annual renewal and payment Agreed – NAB Financial Planning salaried channel has made the decision and will commence the implementation of 12-month agreements on 1 April 2019 in place of Ongoing Fee Arrangements (OFA).

The 12-month agreement will be offered in place of the current OFA to new clients and all existing clients on their next review.

2.2 Disclosure of lack of independence Agreed – NAB will implement disclosures consistent with the recommendation for all NAB licensees.
2.3 Review of measures to improve the quality of advice Agreed NAB supports an industry review in 3 years’ time.
2.4 Grandfathered Commissions Agreed – NAB agrees with the recommendation to remove Grandfathered Commissions as it moves to a fee-for-service model.


NAB Financial Planning salaried channel has commenced turning off Grandfathered Commissions with the benefit being passed through to clients via a rebate or a fee reduction effective 1 January 2019.

2.5 Life risk insurance commissions Agreed – NAB agrees with the Life Insurance Framework (LIF) reforms and the planned review at the conclusion of the LIF transition period.
2.6 General insurance and consumer credit insurance commissions Agreed – NAB supports the recommendation and review of general insurance and consumer credit insurance commissions as part of the overall review to improve the quality of advice as per recommendation 2.3.


The review terms of reference should ensure that customer interests come first, and do not inadvertently reduce access to advice.

2.7 Reference checking and information sharing Agreed – MLC Wealth has already signed up to the ABA reference checking protocol.


2.8 Reporting compliance concerns Agreed.
2.9 Misconduct by financial advisers Agreed – NAB’s approach to dealing with adviser misconduct is already in line with the proposed recommendations.
2.10 New disciplinary system Agreed.


NAB agrees with 9 of the 9 recommendations.

Recommendation NAB’s position
3.1 Trustee – “No other Role or Office” Agreed – NAB supports the principle that the trustee of an RSE should be prohibited from assuming any obligations other than those arising from or in the course of its performance of the duties of a trustee of a superannuation fund.  Clarity is required as to how this will be implemented as to what extent the change will relate to entities and individuals.
3.2 No deduction of fees from MySuper Accounts Agreed – We support strengthened controls over the deductions of advice fees from super accounts and fees for service in general.  We will work with Treasury and the industry on the detail for implementation noting the importance of all customers being able to access advice, if they choose, and receive best possible outcomes.
3.3 – No deduction of fees from Choice Accounts Agreed.
3.4 Hawking of Superannuation products Agreed.
3.5 Single Default Superannuation Accounts Agreed.
3.6 Treating of Employers Agreed.
3.7 Civil Penalties Agreed.
3.8 ASIC and APRA responsibilities Agreed.
3.9 Extension of BEAR regime to Superannuation Agreed.


NAB agrees with 15 of the 15 recommendations.

Recommendation NAB’s position
4.1 No hawking of insurance Agreed – Clarity is required around the definition of “hawking” as NAB believes an insurance product directly related to a banking product should be discussed with a customer during the customer inquiry. (e.g. APRA requires mortgage customers to hold building insurance (APG223)).
4.2 Removing the exemptions for funeral expenses policies Agreed – NAB does not sell funeral expenses insurance.
4.3 Deferred sales model for add-on insurance – Agreed.
4.4 Cap on commissions and Add-on insurance sold by motor vehicle dealers Agreed – NAB does not sell add-on insurance products through vehicle dealers.
4.5 – 4.8, 4.12 – Insurance Contracts Agreed – Although not an insurer, NAB agrees with the intent of proposed measures that protect customers and will achieve fairer insurance outcomes.
4.9 Enforceable code provisions Agreed.
4.10 Extension of Sanctions Powers Agreed.
4.11 Co-operation with AFCA Agreed.
4.13 Universal terms review Agreed.
4.14 Additional scrutiny for related party engagements Agreed.
4.15 Status attribution to be fair and reasonable Agreed.


NAB agrees with 7 of the 7 recommendations.

Recommendation NAB’s position
5.1 Supervision of remuneration – principles, standards and guidance Agreed.
5.2 Supervision of remuneration – aims Agreed.
5.3 Revised prudential standards and guidance Agreed.
5.4 Remuneration of front line staff Agreed.
5.5 Sedgwick Review Agreed – NAB has fully implemented the Sedgewick review Retail Banking recommendations ahead of schedule.  Further industry engagement is required on the Broker recommendations.
5.6 Culture and governance. Agreed – The recommendation is aligned with NAB’s approach to address weaknesses identified in NAB’s Self-Assessment. Actions include improving leader capability, increased accountability with a focus on ensuring that we get the best possible outcomes for our customers – every time.
5.7 Supervision of culture and governance Agreed.


NAB agrees with 18 of the 18 recommendations.

Recommendation NAB’s position
6.1  – 6.14 Regulatory Bodies and Reforms Agreed – NAB agrees with all 14 regulatory recommendations which will require ASIC, APRA and the Government to implement.  NAB will proactively support their implementation.
7.1 Compensation Scheme of Last Resort – Agreed.
7.2 Implementation of ASIC Enforcement Review Taskforce Agreed.
7.3 – 7.4 Exceptions or Qualifications.  Agreed – NAB agrees with the simplification of the law by eliminating exceptions and qualifications and identifying fundamental norms of behaviour.


8 November 2018

NAB’s response to the Royal Commission Interim Report

NAB’s response to the Royal Commission interim report was submitted on 26 October 2018 and can now be viewed on the Commission’s website.

In an opening letter accompanying NAB’s submission, NAB Group CEO Andrew Thorburn acknowledged that the Royal Commission had been confronting and challenging for the financial services industry, for NAB and for its people.

“The interim report is fair and balanced, and poses many important questions of policy and practice. In responding, we have challenged ourselves to think deeply and differently about current industry norms, as well as our own sometimes long-held positions and practices”, Mr Thorburn said.

“In order for Australia to be ready for both the risks and opportunities we face in the future, we need banks that are strong. But strength is more than just about balance sheet or profitability – it is also about being valued by customers for the products and services we provide.”

While NAB had responded to many issues raised by the Commission through various reforms announced this year, Mr Thorburn said further actions would be taken to earn the trust and confidence of customers, shareholders and the community.


28 September 2018

Statement on the Royal Commission interim report – NAB CEO Andrew Thorburn

“I have had the opportunity to read the summary of the Royal Commission interim report and will review the report in more detail over the weekend.  I would like to thank the Commissioner for his thoroughness and diligence.

For us at NAB, where we have made mistakes or done the wrong thing, we will own them and fix them.  It is difficult to face the statement of ‘profits before people’, but this is exactly what we need to confront.  Banking was built on putting people first and earning the trust of customers.  We must return to these principles once again, rather than continuing to be short term managers.”


20 April 2018

Media Statement on the Royal Commission – NAB CEO Andrew Thorburn

“I’ve been a proud banker for more than 30 years – but no leader in our industry could be proud of what we have heard during the Royal Commission.

The Australian community has heard confronting evidence that is unacceptable.

Our people have heard this too, and they are hurting because they know this is not what banking stands for, or why they turn up to serve their customers and communities every day to do the right thing.

It is now clear to me that the Royal Commission is necessary and justified. Customers and their concerns are being heard through this process, and it is important that as an industry we learn from what we hear, and that this intervention becomes the catalyst for the industry to restore the trust and respect of the community.

NAB is committed more than ever to the changes we have made, and will continue to make, to ensure customers come first – always.”


13 March 2018

Royal Commission – round 1 hearings

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry will hold its first round of public hearings from Tuesday 13 March to Friday 23 March, in Melbourne. NAB will be appearing at the hearings, which commence at 10am on 13 March and will be streamed lived through the Royal Commission’s website.

The Royal Commission has indicated the first round of public hearings will consider aspects of the treatment of consumers by banking and financial services providers in connection with a number of credit products, including residential mortgages, car finance and credit cards. It will also consider the arrangements and practices of banking and financial services providers and their intermediaries.

NAB CEO Andrew Thorburn has written an open letter to customers, employees, shareholders and the community about the journey we’re on to grow and change – and how the Royal Commission will challenge us to be even better.


12 February 2018

Royal Commission – first public hearing

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry will hold its initial public hearing this morning, at 10am in Melbourne. The hearing will be streamed lived through the Royal Commission’s website.

We look forward to hearing from the Royal Commission as it considers all responses and submissions – and outlines the next steps.


08 February 2018

NAB waives customer confidentiality clauses for Royal Commission

Attributable to Sharon Cook, NAB’s Chief Legal and Commercial Counsel

“If any of our customers want to make a submission to the Royal Commission we encourage them to do so and we will waive any confidentiality obligations they have agreed to when resolving an issue with NAB.

“We are doing this because it is important to us that we support customers being heard by the Royal Commission.

“We have also communicated to our people we fully support them making a submission to the Royal Commission if they would like to.”


29 January 2018

NAB Royal Commission Response

NAB confirms it will today provide its response to a request for information from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

This response is to correspondence from Commissioner Ken Hayne AC QC dated 15 December, 2017.  In his letter, the Commissioner requested that NAB identify misconduct or conduct which NAB considers has not met community standards and expectations since January 2008.

NAB Chief Legal and Commercial Counsel Sharon Cook said: “NAB is committed to fully co-operating with the Royal Commission and welcomes the opportunity to assist by answering the information request.

“We will respect the processes that the Commissioner puts in place and now look forward to hearing from the Royal Commission as it considers all responses and submissions – and outlines the next steps.”

Mrs Cook said that NAB remains focussed on building the trust and respect of customers and community confidence in the sector.

“We will continue listening to customers to understand how we can serve them better, what we can do to improve and what we need to fix,” she said.

“It is important to NAB, our customers and the community that we learn from the past and work together to build a better banking industry. That’s why we support customer voices being heard by the Royal Commission.

“We are committed to addressing customer complaints. We want to hear from any of our customers who have issues or concerns with NAB. We also respect our customers’ right to raise their concerns with the Royal Commission and we encourage them to make a submission if they would like to.”

NAB’s bankers have today received information to support customers who want to make a submission to the Royal Commission. Customers can also contact NAB directly on 1800 152 015 or speak to their banker.



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