NAB failed to report financial adviser fraud

24 April 2018

NAB failed to report financial adviser fraud

NAB did not report instances of financial advisers falsifying documents to either the corporate regulator or Financial Planning Association, allowing employees who were terminated for misconduct to find work elsewhere, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry heard on Tuesday morning.

NAB senior executive Andrew Hagger resumed his evidence from Monday afternoon, being questioned by senior counsel Rowena Orr QC about why NAB failed to alert the Australian Securities and Investments Commission (ASIC) or the Financial Planning Association (FPA) of financial adviser misconduct.

This follows admissions from Mr Hagger on Monday that NAB financial advisers engaged in improper or dishonest conduct. This includes incorrectly witnessing binding documents, forging customers’ signatures, impersonating customers and making unauthorised withdrawals from customers’ accounts.

These actions may affect the validity of forms for about 2500 NAB customers.

One financial adviser, Bradley Meyn, deliberately falsified beneficiary nomination forms for superannuation funds, breaching the bank’s code of conduct and regulatory obligations, and placing customers at significant financial risk.

But although NAB fired Mr Meyn, it did not report him to the FPA. This allowed Mr Meyn to seek employment elsewhere in the industry.

NAB also failed to report Mr Meyn to ASIC, despite his conduct raising “serious compliance concerns”. Mr Hagger conceded that “knowing what I knew from ASIC on 1 April, he should have been reported at that time.”

In total, 353 NAB employees have been involved in incorrectly witnessing binding beneficiary nomination forms. If invalidly witnessed, these forms could affect the distribution of superannuation and benefits in the event of clients’ deaths.

NAB eventually notified ASIC of the falsifications, but not until about six months after he was fired. NAB contacted affected customers and, according to Mr Hagger, almost all of these re-signed the forms with valid witnesses. “As things stand today, there are about 250 customers who have not yet returned those forms,” he said.

An external report on ethics within NAB was produced less than a year before it was revealed that Meyn was falsifying documents. The report found that ethical breaches rarely resulted in termination of employees, failing to provide consequences or deterrence for employee misconduct.