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An Open Letter to Andrew Thorburn

Explosive Evidence at the Banking Royal Commission

Toxic Executive Culture Continues

Last week the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry heard explosive evidence about bank executives charging customers fees for no service, misleading the regulator, and then thinking up creative ways to avoid paying the money back. When all that failed they tried stalling repayments. As a result the Commission required NAB Executive, Consumer and Wealth, Andrew Hagger, to attend the Royal Commission again yesterday to provide an explanation for the bank’s behaviour.

Is Your Super Safe?

Late last week the FSU wrote to NAB seeking clarification about whether the fee for no service scandal extended to employee superannuation accounts.

The FSU will be writing to each of the big four banks to clarify whether they have been charging fees for no service on employee superannuation accounts.

We will take all necessary steps to ensure FSU members have not been adversely affected.

Workers are Not the Problem

Bank Executives have tried hard to make the Royal Commission all about individual workers behaving badly. We know it's really about toxic cultural and systemic issues caused by poor leadership.

Conflicted remuneration structures are central to the community’s loss of trust and confidence in our industry. Despite the ABA Review into product payments and commissions and their relationship to poor customer outcomes, almost 18 months on, nothing has really changed.

Conflicted Remuneration – The Real Problem

Workers are still reporting daily and relentless pressure to sell products regardless of the best interest of the customer.

This conflicted position is bad for customers and bad for communities.

It only serves bank executives, who make millions of dollars each year in pay and bonuses as a reward for perpetuating this sales culture.

NAB executive Andrew Hagger, who oversaw the fee for no service scandal that was exposed in the Royal Commission last week, also oversaw the Beneficiary Nomination form issue. In 2017, while overseeing these epic systemic and cultural failings, his total remuneration realised was over $2.8 million. He was graded as having “achieved” and as demonstrating NAB’s values and behaviours. The double standard is stark.

The Commission heard evidence that, in the last four years, NAB had not provided breach notices to ASIC within 10 days as required by the Corporations Act on 84 occasions. 83 of these failures had been breaches arising from the Wealth division that Mr Hagger is in charge of. If a front-line worker had failed to act within a time limit imposed by the Corporations Act on 83 occasions, they would not be rated as “highly achieved”, and would not receive millions in bonuses.

FSU Calls for an Independent Review of Culture across Banking

It’s blatantly obvious that self-regulation is failing workers, customers and our community. While banks remain addicted to conflicted pay models, culture will not change.

The FSU has issued an open letter to Andrew Thorburn calling for an independent review of NAB culture. The issues identified at NAB are industry-wide. All banks have embraced pay models that incentivise the pursuit of short-term incentives and profits over good customer outcomes. NAB must first acknowledge the cultural problem created by conflicted pay models, and work with the Union on industry solutions that benefit workers and rebuild community trust and confidence.

You can read the open letter to Andrew Thorburn here: http://bit.ly/OpenLetter18 or view the full text below.

 

13 August 2018
By email: Andrew.Thorburn@nab.com.au
CC: Catherine.A.Delaney@nab.com.au

 

Mr Andrew Thorburn
Chief Executive Officer
National Australia Bank Limited

Dear Mr Thorburn
Call for an Independent Review of Organisational Culture
Open letter from the Finance Sector Union to NAB on issues raised by the Royal Commission

At the Royal Commission into the Banking, Financial Services and the Superannuation Industry last week we heard almost four days of evidence about NAB’s behaviour in relation to superannuation funds. The evidence was alarming. As a result of the evidence you issued a statement to employees which sought to allay concerns.  The statement suggested that the issues were isolated, rather than systemic.

The issues raised by the evidence before the Royal Commission are not isolated, nor were due to the conduct of front line employees. Rather there is a fundamental and ongoing crisis in management culture at NAB.   

NAB’s cultural failure led to poor decisions such as the charging of adviser fees on superannuation accounts where there was no adviser to be paid (and then NAB keeping the money), and the charging of fees for services provided to superannuation fund members who were deceased.  Critically, it also led to (and continues to lead to) an unwillingness among NAB leadership to be accountable for actions and to deal, fairly and ethically, with the consequences of errors.

NAB employees and other members of our sector viewed with shame the evidence before the Royal Commission that showed a pattern of behaviour from NAB management which focused on minimising costs to NAB, blameshifting and downplaying the seriousness of issues rather than genuinely confronting problems and finding solutions in the interests of customers.  This pattern of behaviour was on display in oral evidence given to the Commission: Both Mr Carter and Ms Smith appeared repeatedly to articulate that the mistakes were not their personal fault even where it had not been suggested they were.

The experience of successful banks internationally, is that organisational culture is critical. Successful culture can be difficult to define, but involves, as set out in the Banking and Finance Oath, a focus on an industry that “meets the community’s needs and has its full confidence thereby fulfilling its integral role in society”.  It requires a commitment to acting in good faith, with ethical restraint, honestly, a willingness to own and address mistakes when they happen. It also requires providing all employees with the training and support so that can pro-actively contribute to a shared vision with the associated improvement in relationships of trust with consumers and each other.

Rather than downplaying problems, the Union and its members ask that you recognise the opportunity that this moment presents. NAB can draw a line in the sand and commit to becoming the leader in Australian banking, with a commitment to an ethical culture of excellence.

The Union believes that the first step is to identify, honestly and fairly, what issues must be acted on. Such a process must involve a thorough and detailed cultural review, that permits all staff, without fear of retribution, to openly discuss what NAB is doing well and what it can do better. The review must be done with fresh and independent eyes, and be underpinned by a commitment to make the changes to culture the evidence before the Royal Commission has demonstrated NAB needs.

Yours faithfully,

Julia Angrisano

National Secretary

Finance Sector Union of Australia


 

Authorised By: Julia Angrisano, National Secretary
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