Finance Finance News Cormann demands explanation from NAB after bombshell revelations

Cormann demands explanation from NAB after bombshell revelations

nab leaks ken henry
Senator Cormann (left) says NAB has some explaining to do after Ken Henry's reported comments. Photos: AAP
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Finance Minister Mathias Cormann says NAB needs to explain itself amid reports it and former chairman Ken Henry kept details of poor practices out of material prepared for the regulator.

“That’s obviously a matter for NAB to explain throughout the day, today,” Senator Cormann told Sky News on Friday.

A draft report about NAB’s performance on risk management and culture – required by the Australian Prudential Regulation Authority – was prepared by professional services firm EY in mid-2018.

Nine News says documents shared by a whistleblower show details of the bank’s poor systems and governance uncovered by EY weren’t included in the report.

Among those details was an admission by Mr Henry, the bank’s now-outgoing chair, in a meeting with EY that he was “confident” NAB was still selling products that were ripping off customers and would eventually trigger compensation.

The admission came while the 2018 Hayne banking royal commission was running.

It’s unclear whether the details were included in a later, final report to APRA.

The whistleblower who leaked the documents said they were concerned about what they claimed was NAB’s lax approach to risk management, slow customer remediation and conflicts of interest between it and its consultants.

Senator Cormann said an explanation was important in the aftermath of the Hayne royal commission. He said the revelations were concerning.

“But obviously there’s an opportunity for Dr Henry and the NAB to provide context around that, if that is possible,” he said.

National Australia Bank insisted on Friday that it had been “open and transparent” about making significant improvements to its practices since it was hauled over the coals at the royal commission.

“A review of all NAB products has commenced, with consideration of product design and how products are being used by customers,” NAB chief risk officer Shaun Dooley said

Meanwhile, the country’s big four auditing firms face scrutiny from a parliamentary inquiry as a result of the NAB admissions.

The Parliamentary Joint Committee on Corporations and Financial Services will look at audit quality and the effectiveness of competition in the sector.

KPMG, Deloitte, EY and PwC will go under the microscope after an inquiry was pursued by Labor senator Deborah O’Neill on Thursday.

The inquiry will report back in March next year.

The banking inquiry uncovered shocking evidence of misconduct and greed in the Australian financial sector, at the expense of customers and businesses.

Commissioner Kenneth Hayne made 76 recommendations, with the government committing to “taking action” on all of them.

Bosses from a range of financial services institutions will also be grilled by federal politicians on how they are responding to the royal commission.

Treasurer Josh Frydenberg said expanding the committee’s scope would help restore community trust in the sector.

“This inquiry will help provide further transparency to the public on the work financial institutions are undertaking to implement recommendations from the royal commission,” he said.

Shares in NAB fell as much as 2.9 per cent in early trade on Friday the whistleblower’s revelations.

NAB has already set aside $1.1 billion in customer remediation and cut its dividend to its lowest in almost nine years.

-with AAP