Head of wealth management backed by CEO Andrew Thorburn during banking inquiry for doing a ‘very good job last year’

This article is more than 3 years old

This article is more than 3 years old

The head of the consumer and wealth division of National Australia Bank received a 36% increase in pay after the division overcharged its superannuation customers by $34.7m.

The Australian Securities and Investments Commission (Asic) reported in February that more than 220,000 member accounts were incorrectly charged planned service fees of approximately $34.7m between September 2012 and October 2016. The bank has had to repay the money to its customers.

The evidence was heard in the second round of parliamentary committee hearings into the big four banks, established by the government in response to calls from the Greens, the Labor party, Nick Xenophon Team and One Nation for a banking royal commission.

The NAB chief executive officer, Andrew Thorburn, was equivocal during questioning over whether senior executives had been sacked over the issue. He said two executives had left but he was unsure whether they had been sacked or had left of their own accord. He agreed to provide the answer at a later date.

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However, he said several planners at a lower level had been sacked after previous financial planning scandals.

“There have been 55 planners that we have terminated because of poor conduct between 2009 and 2015,” Thorburn said. “In that time, we have 4,400 planners. So 55 is too many, not good enough but it’s in the context of 4,400 people, 99% of them are doing the right thing.”

He was eventually forced by Liberal committee chair David Coleman to concede that the head of the wealth management division, Andrew Hagger, had received 120% of his bonus last year.

Thorburn also confirmed under questioning from Labor’s Matt Thistlethwaite that Hagger received a 36% increase in total salary.

A week after the Australia Post managing director Ahmed Fahour resigned after controversy over his $5.6m remuneration package, Thorburn defended Hagger, saying he came to the bank to address problems in the wealth management division.

He said Hagger implemented a customer response initiative and was responsible for the sale of 80% of NAB’s life insurance business to Nippon Life for $2.4bn.

“That is a major transaction in the bank, that was a $3bn transaction,” Thorburn said. “Andrew Hagger did a very good job last year.”

After the inaugural hearings in October last year, the parliamentary commitee made several recommendations, including that banks should publicly report significant regulatory breaches within five days of reporting the incident to regulators.

It recommended that such reports include a description of the breach and how it occurred, the names of senior executives responsible for the teams where the breach occurred and the consequences they faced, and an explanation for why an executive is not dismissed (if they are not).

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The big banks have rejected that recommendation. Thorburn said that if employees did not meet the standard, they left the company.

Coleman told Thorburn he found it “exceptional” that the banks would reject the recommendation on the grounds that employees might not report breaches if they knew they would be publicly reported.

“I think what you mean by that is in a scenario where a breach has occurred, if you were required to release that information publicly, you think your people might be inclined not to want to release it and not report the breach at all, which would be compounding one breach with another,” Coleman said.

“I found that quite exceptional that you would use that as a justification for not wanting to publicly report this information.”



Thorburn said the bank would, under existing circumstances, report a breach to Asic but he would prefer an industry-wide response.

“If it does happen, we believe it should be an industry response, a standard industry response. So we’re happy to continue that conversation, but at the moment we believe what we do is appropriate for our clients.”

Thorburn is also chairman of the Australian Bankers Association, the chief industry lobby group, which recently appointed the former Queensland Labor premier Anna Bligh as chief executive.

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On Tuesday, NAB announced the appointment of Mike Baird as a senior executive, one month after he stepped down as New South Wales premier.

The Greens MP Adam Bandt asked Thorburn if he understood that those appointments had given the impression “more than anything in recent times that the big banks and the big political parties are all in this together”.

Thorburn rejected his assertion. He said Bligh had an understanding of people, given her record as premier reacting to the 2011 Queensland floods and as chief executive of the Young Women’s Christian Association. He said Baird was a former corporate banker whose skills fitted the position.

In the absence of government support for a royal commission, the Greens are pushing for a rare parliamentary commission of inquiry, overseen by judges.

The Greens have the numbers to pass legislation required in the Senate. With the LNP MP George Christensen promising to cross the floor in the lower house, only one more Coalition MP would need to join him to force the inquiry on the Turnbull government.