NAB - Adviser Service Fee refunds
We were all witness to the disturbing findings in the Banking Royal Commission in 2018. For the Financial Planning industry, the most disappointing discovery was the number of Australians who were being charged by an adviser who did not provide advice or services to them. In many instances, the person being charged didn’t even know who their adviser was or the number of years they had been charged “a fee for no service”.
The Australian Securities and Investment Commission (ASIC) directed a number of financial institutions (eg the big 4 banks, AMP etc) to review the fees that were inappropriately charged by advisers within their networks. The period they were advised to audit was 2009 to 2018.
The review was to cover all advisers and a large sampling of clients for each adviser (in some instances all of them). As Godfrey Pembroke was owned by NAB at the time, our network was to be included in this audit.
The logistics of such an audit have proven to be extremely onerous on the bank (who commenced with their NAB Financial Planning Advisers – who are salaried advisers, employed by the bank - compared to self-employed advisers like Godfrey Pembroke). It has taken nearly three years, and progress has been slow. NAB determined that this could take many years to complete and have approached ASIC with a solution to bring this to a close so the bank can move on.
They have agreed with ASIC to refund eligible clients a proportion of their fees (based on a formula derived from their initial audit). Importantly, they have agreed to do this irrespective of whether advice services were provided or not.
Clients of Newcombe Kritsimas Partners will know that we have always delivered on our service standards and have operated a highly engaged business with our clients since the beginning. As a result, we believe that had the bank pursued their audit, none of our clients would be eligible for a fee refund.
However, due to their desire to close this chapter of their history, the bank has taken what we believe to be a very pragmatic approach that could result in a financial windfall for some of our clients.
We have written to inform you that, you could potentially receive a letter from NAB which will detail the refund they are paying you, how the amount has been calculated, and where it has been paid. NAB have started sending out notices and anticipate this to continue for a number of months.
The refund will be directed to the account it was originally paid from. There could be some logistical challenges with some accounts having since been closed. As these challenges arise, we will work through them with you. Some clients may also receive more than one refund if advice fees were collected from more than one source.
Unfortunately, NAB cannot provide a list of all included clients or a copy of the letter they send (as they could potentially breach privacy issues) so we are sending this to all clients advised during the audit period.
No action is required at this stage. If you receive a letter from NAB in the coming months, firstly, it is not a scam!! Secondly, please call or email us if you require any assistance with this or are having difficulty locating the funds stated in the letter.
All the best,
Andrew, John, Evan, Samantha and David