NAB remediation scheme for financial planning could deny compensation to affected customers
23 October 2015
NAB financial planning customers could miss out on compensation for negligent financial planning advice, because of flaws in the company’s remediation scheme, says national law firm Maurice Blackburn.
Josh Mennen, principal and head of financial advice disputes said it was a mistake for NAB to limit its full review of financial advice given to customers to the post-2009 period.
“It’s unclear how the bank plans to capture all customers who have had poor financial planning advice since 2009. There is no legitimate basis to exclude victims of poor financial advice given before that time. It was pre-2009 advice that caused the worst losses when the GFC left thousands of Australians over exposed to investment markets. Under NAB’s proposal, many victims of poor financial advice, including customers of banned advisor Alfie Chong will be ineligible for a review.
“NAB say they will be contacting customers who may have received non-compliant financial advice since 2009. We don’t know who will decide which customers ‘may have received non-compliant financial advice’ but in any case NAB should be contacting all customers who received advice pre and post GFC and inviting them to have their advice reviewed. They should also agree to waive any Court or Ombudsman time limitation issues.
NAB are only offering to pay for customers to get independent advice from a professional of their choice after the review process has been concluded by NAB. By that time NAB will have already made its decision. The offer for professional assistance should be made at the first point of contact with the customer so they can be guided through the review by an independent professional who is looking out for their interests. Although it’s good that Professor Dimity Kingsford-Smith is working with NAB as a customer advocate, one person cannot possibly assist all customers through the remediation process, which has already been bogged down in delay for too long, said Mr Mennen.
“From our experience with other financial planning advice cases, with offers of financial compensation it is tempting to take the first offer made by the bank and put the experience behind you. In general however, the first offer is almost never the best one, and some cases we have managed there has been up to seven reviews before settling on a final – and significantly higher - offer of compensation,” he said.