- NAB will shell out $832 million after tax in customer remediation funds for the fee-for-no-service scandal brought to light in the Royal Commission
- The bank has, so far, spent $2.09 billion on customer remediation efforts
- The bank is also changing the way it capitalises its software, resulting in a total reduction in full year net profits of $1.18 billion
- Most funds will go towards refunding customers who paid service fees to self-employed advisers
- NAB’s share price is down 2.96 per cent today, currently sitting at $28.93 apiece
NAB has taken a one billion dollar hit to its yearly profits after shelling out $1.18 billion in charges over customer-related remediation processes and changes in its software capitalisation policy.
The latest monetary commitment by the banking giant to customer remediation brings the total, thus far, to $2.09 billion.
The growing fund is put in place to predominately refund customers who have been affected by paying service fees to self-employed advisers.
NAB detailed it is taking these measures to make amends and protect its customers going forward.
“NAB is moving forward with rigour and discipline to make things right for customers,” NAB’s CEO Phillip Chronican said.
“We have undertaken to significantly uplift customer remediation practices, as part of a board program of reform to change the way we operate and ensure NAB meets customer and community expectations,” Phillip continued.
A key issue raised throughout the Banking Royal Commission was customers paying for adviser services without receiving advice. This is referred to as fees-for-no-service by the Australian Securities and Investments Commission.
So far, the bank has made 450,000 refunds worth $202 million and has employed a 400 strong remediation team.
Additionally, NAB revealed, following review, its software capitalisation threshold has changed from $500,000 to $2 million.
It is expected this will reduce the bank’s capitalised software balance by $494 million, and its cash earnings for the second half of 2019 by $348 million.
The bank’s share price is down 2.59 per cent today following the billion dollar charge. Shares in NAB are currently trading for $28.93 each, as of 11:04 am AEST.