National Australia Bank (NAB) has set aside additional costs of A$525m (£288.9m, $375.9m, €334m) after tax in connection with provisions for its customer remediation programme.
This is expected to reduce H1 2019 cash earnings by an estimated A$325m and earnings from discontinued operations by an estimated A$200m.
Of the 9 charges against the firm in H1, approximately 91% are for wealth related matters with the remainder in banking.
In combination with provisions raised for the 18 charges in H2, this brings the total for customer-related remediation to A$1.102bn at 31 March 2019.
NAB’s chief executive, Phillip Chronican, said: “We are putting things right where we have treated our customers poorly and making sure that they are compensated more quickly.
“Since June 2018, we have made approximately 360,000 payments to customers with a total value of around A$145m.
“There are currently around 350 people dedicated to remediating customers and we will soon have around 500 across NAB as we bring greater focus and discipline to resolving issues and making sure they do not happen again.”
Reasons for increase costs
NAB said that there were several different key times giving rise to the increase in remediation costs, such as:
- Consumer credit insurance sales through certain NAB channels;
- Non-compliant advice provided to wealth customers;
- Adviser service fees charged by NAB Financial Planning (salaried advisers);
- Adviser service fees charged by NAB Advice Partnerships; and
- Banking related matters including provisions for incorrectly charged fees on certain fee-exempt transactions.
Further details of the remediation programme will be provided on 2 May 2019, when NAB releases its half year results.
