ASIC has announced that it has imposed additional licence conditions on the Australian financial services (AFS) licence of NAB’s superannuation trustee, NULIS Nominees (Australia) Limited (NULIS), following breakdowns in internal procedures.
The conditions require NULIS to engage an ASIC-approved independent expert to assess and report on the adequacy of its compliance and risk management practices for its retail and wrap superannuation funds.
NAB’s wealth entities lodged breach reports with ASIC following NAB’s restructure of its superannuation business by transferring superannuation funds (including the MLC MasterKey Business Super (MKBS) and MLC MasterKey Personal Super (MKPS) products) into the MLC Super Fund. NULIS also became the trustee of the transferred funds.
The breaches involved a breakdown in risk management and communication procedures following the transfer in 2012 and 2013 of all members in a number of products to MKBS and MKPS, as well as changes made to the death and total and permanent disablement (TPD) insurance of MKBS and MKPS members. Approximately 400,000 members were impacted by the insurance changes.
System breakdowns included:
- inadequate disclosure of insurance changes to members;
- inadequate training for staff, and
- insurance policies not being updated.
As a result of the breakdowns, incorrect death and TPD insurance tests were applied to MKBS and MKPS members between May 2013 and July 2015.
NAB’s wealth entities have identified that 10 members’ insurance claims were incorrectly assessed with approximately $1.6 million in members’ claims underpaid or declined. NAB has compensated affected members a total of $1.8 million, including interest.
The independent expert’s review will consider, among other things NULIS’:
- risk management procedures;
- process for implementing product changes, disclosure and reporting to members, and
- procedures for managing conflicts of interest within NAB’s superannuation business, including the assessment of related party service providers.
Separately, NAB’s wealth entities identified that over 220,000 member accounts were incorrectly charged planned service fees (PSFs) of approximately $34.7 million between September 2012 and October 2016 in the MKPS and MKBS products.
Fund members were charged PSFs for the provision of general advice in circumstances where no plan adviser had been appointed to provide such advice. ASIC’s report Financial advice: Fees for no service issued in October 2016 (Rep 499) included part of this amount in the estimates of compensation to be paid to consumers for such failures. Since the release of that report, NAB has confirmed that it will compensate these fund members for the incorrect charge and have also confirmed the compensation to be paid.
