Tag: Customer Remediation

NAB Up’s Customer Remediation Costs

NAB says that an additional charge of $525 million after tax ($749 million before tax) relating to its customer remediation programme. As a result 1H19 cash earnings will drop by around $325 million and earning from discontinued operations by $200 million.

They say they have made around 360,000 payments to customers with a total valuer of $145 million, and the remediation team is building from 350 to around 500 across NAB.

Of the 1H19 charges, 90% relate to wealth, the remainder banking. IN combination with provisions raised in 2H18, total provisions for customer related remediation to 31 Match 2019 is $1,102 million.

The items responsible for this include:

  • Consumer credit insurance
  • Non-compliant advice to wealth customers
  • Adviser service fees by NAB advice partnerships (does not include allowance for customer refunds)
  • Adviser service fees charged by NAB Financial Planning
  • Banking related matters such as incorrect fee take on fee expect transactions.

These costs are to be held below the line as it were, but clearly investors and potentially customers will have to pay for this litany of poor practice.

It begs the question, can the NAB behaviourial norms be turned around? And at what cost?

NAB Lifts Provisions For Customer Remediation

More putting the trash out, before the results season.

NAB announced today additional costs of $314 million after tax in connection with its customer remediation programme.  This will reduce 2H18 cash earnings by an estimated $261 million and earnings from discontinued operations by an estimated $53 million.

These matters include:

  • refunds and compensation to customers impacted by the issues in NAB’s Wealth business, including advisor service fees, plan service fees, the Wealth advice review and other Wealth related issues
  • costs for implementing remediation processes
  • other costs associated with regulatory compliance matters

Of the cash earnings impact, approximately 69% of these costs will impact revenue, with the balance reported in expenses.

As outlined in the third quarter trading update, these additional costs will be excluded from the FY18 expense growth guidance of 5-8%. Costs associated with responding to the Royal Commission are not included in these additional charges.

NAB says it remains well positioned to meet APRA’s ‘unquestionably strong’ benchmark in an orderly manner by January 2020.

But they also said that these customer remediation programs are expected to continue into FY19, with potential for further costs, which remain uncertain at this point in time.

Further detail will be provided when NAB releases its 2018 Full Year results on 1 November 2018.