Money Finance News NAB sets aside $314 million for compensation
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NAB sets aside $314 million for compensation

NAB is setting aside cash for compensation.
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The cost of NAB’s customer remediation program continues to grow with the bank today announcing further costs of $314 million, cautioning more costs could come.

National Australia Bank said second-half cash earnings – the banks’ preferred measure of profitability – would take a $261 million hit from refunds and compensation for issues, including adviser service fees and plan service fees.

The remaining $53 million was related to ‘discontinued operations’.

The charges will be the last for NAB in the 2018 financial year, the results of which will be reported on November 1. But the lender said there could be more to come as customer remediation programs continued into the next financial year.

“Where we have let customers down, we are determined to put things right,” NAB chief executive Andrew Thorburn said.

“We have made good progress in resolving a number of issues that impacted our customers and we want to compensate them as quickly as possible.”

About 69 per cent of the cash earnings hit will affect revenue, with the remainder reported in expenses.

NAB already said in its third-quarter trading update that the costs were excluded from full-year expense growth guidance of between 5 and 8 per cent.

Costs associated with responding to the royal commission are not included.

The bank’s announcement follows similar action by Commonwealth Bank and ANZ last week.

ANZ said its full-year profit will take an $824 million hit, more than half of which has come off the back of the bank’s remediation program. CBA announced it will forgo $45 million in annual income to rebate grandfathered financial advice commissions to customers.

Commonwealth Bank has already paid out an estimated $270 million to customers who got poor financial advice or were charged for services they didn’t receive.

The executives of both Commonwealth Bank and ANZ recently stood before the House of Representatives standing committee on economics, alongside Westpac chief executive Brian Hartzer to be grilled about some of the issues raised before the royal commission.

NAB’s Mr Thorburn will face the same committee on Friday, October 18.

-with AAP