The bank agreed to significantly lift compensation for fee-for-no-service victims but did not tell Asic

This article is more than 2 years old

This article is more than 2 years old

National Australia Bank has been accused of withholding information from the corporate regulator about its plans to boost compensation payments for fee-for-no-service victims to avoid a public relations controversy.

The banking royal commission heard evidence on Monday that NAB executives had agreed in October 2016 to significantly lift compensation payments for fee-for-no-service victims, from $12.7m to $34m, but the information was withheld from the the Australian Securities and Investments Commission (Asic).

The commission heard evidence that NAB knew Asic was soon releasing a report on the industry-wide fee-for-no-service scandal, and it withheld the information about its higher compensation payments because it wanted to remain “in the middle of the pack” when Asic’s report came out.

Andrew Hagger, NAB’s former head of wealth, told the commission that within hours of NAB executives agreeing to boost the compensation payments, he had spoken to the Asic commissioner, Greg Tanzer, on the phone.

But he said he didn’t tell Tanzer of the decision because he didn’t want to “front run” board discussions later that week where the compensation payments would get formal approval.

Banking royal commission: the week the inquiry turned its sights on super Read more

Hagger told the commission he had an open and transparent relationship with Asic, and he had “left the door open” during his phone conversation with Tanzer for Tanzer to ask for the most up-to-date information for Asic’s upcoming report.

But Tanzer didn’t ask for the latest up-to-date information.

The commission was told that that same day, Asic sent an email to NAB asking for its latest estimate for its compensation bill, saying it would use the most recent $12.4m figure if no other figure was provided.

NAB’s regulatory affairs boss then emailed to Asic: “Thank you. Please use the … $12.4m figure.”

Hagger was appearing at the royal commission for the second time, having appeared as a witness in an earlier round of hearings. He was the only witness to appear at two rounds of hearings so far.

After last week’s royal commission hearings, the NAB chief executive, Andrew Thorburn, posted a video apology on Twitter saying he was committed to learning from the experience “so we can once again be a bank you respect and trust”.

It came after four days of evidence during which NAB’s lawyers tried repeatedly to prevent explosive documents being disclosed to the public.

After that battle was lost, the public learned the corporate regulator had accused NAB last year, during private correspondence, of more than 100 potentially criminal counts of breaches of its licence in relation to charging fees to superannuation customers for services not provided.

NAB issues public apology after week of damning evidence at royal commission Read more

On Monday, senior counsel assisting Michael Hodge became visibly frustrated with Hagger’s inability to remember events from the last two years, and with Hagger’s insistence on providing long, detailed answers to questions that required yes or no statements.

The commission also heard evidence from QSuper, Australia’s third-largest super fund with funds under management of $104bn, and with 580,000 members.

Lyn Melcer, QSuper’s head of technical advice, told the commission about the time she had spent with Indigenous members in Lockhart River and central Australia.

She said people in remote communities often have barriers to accessing their super that people in cities don’t.

“We always assume everyone has a driver’s licence, but that’s not always the case,” she said.

“I think my view is that life in the APY Lands is probably pretty harsh. They have the same issues of Lockhart River in terms of, I would expect, economic-type issues, unemployment, high cost of living.

“It’s quite harsh territory in central Australia, their remoteness. They had only received, I think, mobile phone access probably two or three weeks prior to [our] visit [in 2014]. So when you’re trying to access a superannuation fund via the internet and you have no phone access, that’s almost impossible,” she said.