National Australia Bank (NAB) is set to refund over 300,000 of its MLC superannuation customers a total of more than $67m due to incorrectly charged fees. The bank failed to tell affected customers that a certain fee did not necessitate inclusion in their plans.
Meetings between MLC superannuation trustees Nulis and the Australian Securities and Investments Commission (ASIC) finished with a confirmation that refunds will need issuing to all customers who paid the fee without being aware that they did not need to do so.
MLC, owned by NAB, confirmed that Nulis will no longer be deducting these payments from certain accounts as of 30 September 2018 and others as of 30 November 2018.
Although the average figure paid out to each household will only work out to around $220, this adds up to a substantial figure considering just how many people received inaccurate charges. This news comes at a time when NAB is looking to remove itself from MLC, with the de-merging process taking away the latter’s control of superannuation and wealth management.
The fees came into play after NAB changed the way that it processes financial adviser accounts six years ago, with remuneration based on commission no longer on the table.
MLC Super Chief Executive Matthew Lawrence said that the fees were put in place to introduce a level of transparency around the reason for client fees but confirmed that it made mistakes in cases where it “did not clearly explain [to customers] that they could elect to not have this service, and they could turn off the fee.”
The Royal Commission is currently looking into some of NAB’s affairs, with two weeks of hearings set to discuss the lack of conduct. Representatives of Nulis are set to give evidence in these hearings.
In its half-year results, released this month, NAB confirmed that it has already put money aside to give back to consumers who had received incorrect charges. It will also have funds to divert from its second-half balance sheets.
Lawrence said that while these circumstances are troubling, he would not let the issue affect NAB’s and MLC’s performance and commitment to serving members.
The need for the refunds is occurring in the wake of the Royal Commission criticizing more than one major lender for charging unfair fees to customers who were unaware of them. Both AMP and the Commonwealth Bank ran into trouble for asking clients for fees for services that they did not actually carry out, and Commonwealth Bank even admitted to charging ongoing fees to customers who had died.
NAB’s current issues come at a difficult time for the bank, as it has found itself in the spotlight more than once over the last few months.
One of the most recent incidents stemmed from NAB facing severe pressure to stop charging default interest payments to farmers in Western Australia states who had been struggling with severe droughts. After missing payments due to crop failures and the death of livestock, these farmers then had to deal with the double shock of interest on missed payments. NAB has since written off these costs for farmers, which is likely to ease some of the potential public relations pitfalls that may have been heading its way.