While Westpac was revealing more remediation costs for its customers (something hurried along by the royal commission), the NAB was cutting one of the more controversial fees financial groups pay – so-called introducer fees.
In a statement issued yesterday the bank said it will end its ‘Introducer’ payments program, effective October 1 this year.
“This means NAB will no longer make referral payments to introducers,“ the bank said.
These fees are paid to groups in particular (such as sporting organisations) who send business (especially for home loans) the NAB’s way.
It’s a payment for a third party for what could be construed financial advice.
It’s all about refurbishing the NAB’s image, which took a hammering in the royal commission and its final report.
NAB’s move will pressure on the other banks to follow in ending commissions to these third parties (which also can include members of the public or even family members).
And these are not small amounts. According to the royal commission NAB paid out $100 million in introducer commissions from 2013 to 2016 to an array of people who were from all walks of life, as well as clubs and other bodies.
At that time, NAB had about 8,000 introducers on its books, and an estimated $24 billion of loans were made during the three years – so it isn’t small beer.
Acting CEO, Philip Chronican said it was important to keep improving, taking action and changing to be a better bank. He is due to appear before a parliamentary committee shortly.
“Through the Royal Commission, we heard clearly that our actions need to meet the expectations of our customers and the community. We need to be simpler and more transparent to earn trust. We have to put customers first, to be a better bank,” Mr. Chronican said.
“We want customers to have the confidence to come to NAB because of the products and services we provide – not because a third party received a payment to recommend us.”
Mr. Chronican recognised the significance of these changes for NAB, its bankers, and the industry, but said he was certain it was the right thing to do to deliver better outcomes for our customers.
He said sporting bodies who gained revenue from these fees would have their sponsorships boosted to avoid financial loss.
NAB shares fell 0.7% to $24.90.
