In what represents a key move, National Australia Bank (NAB) has decided to separate MLC Wealth from its consumer banking division when it issues its first half results later this year.
The big banking group has announced the move to the Australian Securities Exchange (ASX) at the same time as announcing a significant reduction in first half earnings because of a net increase in customer-related remediation matters of $268 million before tax, changes to its software capitalisation policy which it said would reduce NAB’s capitalised software balance by $1,056 million and reduce earnings by $742 million after tax and impairment of the carrying value of NAB’s investment in MLC Life of $214 million.
NAB has been preparing its MLC Wealth business for sale for close to two years but, until now, the business has been reported within the consumer banking division.
Importantly, in explaining the increased provisioning for customer-related remediation, the bank said that 69% were for wealth-related matters, 23% for bank-related matters and 8% for Bank of New Zealand.
It said that of the first half cash earnings charges, $184 million after tax related to additional provision required for existing matters which included adviser services fee charged by NAB Financial Planning salaried advisers to reflect a higher assumed refund rate of 40% compared to 28% as at 30 September, last year.
Comments
This whole Haynes induced remediation debacle has gone on far too long. I am an IFA and had some clients come in as they didn't understand the claim they were paid for which they didn't even ask. Cut a long story short the bank planner didn't do anything wrong but rather than go to the expense of a proper investigation, they just did a blanket payment out to all those clients.
You cannot tell me paying clients 'remediation' when they arguably are in a better position from the advice and not seeking compensation is a good precedence or something that should be endorsed in any profession.
ASIC need a kick up the arse, Hayne's BS needs tearing up and we need to approach the entire industry (insto planners, IFA's and industry fund advice) as a profession that are all treated the same, with no little niches cut out for favourite pets and no blanket persecutions.
"Remediation" is bogus. It's not remediation, it's PR. Lots of the clients receiving so called "fee for no service remediation payments" did receive service and were happy to pay the fee.
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