A stash of documents leaked by a whistleblower has revealed the chairman of NAB knew the bank was selling faulty products, even as it was selling them.
NAB chairman Ken Henry told EY auditors that he was “confident” the bank was selling products that would later require compensation, the Sydney Morning Herald reports.
Related story: Big banks' $120m advice compensation: ASIC
This occurred at the same time as NAB was embroiled in the Royal Commission into banks and the financial services sector, with EY engaged to prepare a report for the corporate regulator, APRA.
And according to the leaked documents, troubles within NAB didn’t end there, with other executives telling of shortcomings in risk management.
However, these admissions did not make it into EY’s draft report.
Five months later, Henry appeared before the Royal Commission and later resigned from the bank.
Labor MP Deborah O’Neill has this week moved to launch a parliamentary inquiry into the big audit firms including EY.
"This is a serious and confronting global issue and these [NAB] revelations only reinforce my concerns," she said.
"There is a potential conflict of interest because the big four sell consultancy services to the same companies whose accounts they are meant to be independently auditing."
In a statement provided to Yahoo Finance, NAB chief risk officer Shaun Dooley said Nab has been open about the “significant improvements” required to address problems in its non-financial risk management and compliance.
“NAB’s program of reform includes 26 actions, which are all well underway. Executive and Board customer committees are now examining issues such as complaint handling processes and proactive identification of product hot spots,” he said.
“A review of all NAB products has commenced, with consideration of product design and how products are being used by customers.
“All significant risk matters – financial and non-financial – are detailed in reporting for NAB’s most senior risk committees. These reports are also presented to the NAB Board, the NAB Board Risk Committee and made available to APRA and our external auditor.”
Mathias Cormann says NAB needs to ‘explain’ itself
Speaking this morning, Finance Minister Mathias Cormann said the major bank needs to explain itself.
"It's obviously incumbent on the banking sectors and the financial sector in general to do its bit to restore confidence, to restore public confidence," Senator Cormann said.
"I suspect that a proper explanation today by NAB will be an important part of restoring confidence."
NAB shares fell 2.93 per cent at opening of trade this morning.
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