National Australia Bank (ASX: NAB) has copped a $525 million cost to repay aggrieved customers in the wake of the banking Royal Commission.
This $525 million after tax ($749 million before tax) bill accounts for increased provisions for NAB's customer-related remediation program and is expected to cut its 1H19 cash earnings by a whopping $325 million.
During the Royal Commission, the bank came under fire for pushing insurance schemes on its customers which were not likely to have any material benefit.
Slater and Gordon launched a class action against the bank in September last year stating that most of the victims were "existing NAB customers and the bank should have known the insurance was likely to be of little or no benefit to them."
"Despite knowing this, NAB have continued to push the insurance widely, reaping millions in premiums while doing so," said Slater and Gordon principal lawyer Andrew Paull at the time.
The bank also provided non-compliant advice to its Wealth customers, charged adviser service fees under its Advice Partnership program and incorrectly charged fees on certain transactions which were supposed to be fee exempt.
CEO Philip Chronican said the bank currently has hundreds of staff working to compensate customers who were short-changed as a result of NAB's actions.
"We are putting things right where we have treated our customers poorly and making sure that they are compensated more quickly," said Chronican.
"Since June 2018 we have made approximately 360,000 payments to customers with a total value of approximately $145 million."
"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."
NAB's former CEO Andrew Thorburn reportedly forfeited $23 million in benefits upon his exit from the company following Royal Commission-related criticism.
Last year, he also took a $2 million pay cut upon admitting to the bank's "failures" in its treatment of customers.
Thorburn's remuneration was slashed by more than 30 percent from $6.5 million to $4.37 million at the time.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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