Jury out on NAB compensation
By Lucie Beaman
Disadvantagedinvestors are not bound by a recent undertaking to industry regulators by the National Australia Bank to pay $67.2 million in compensation following product pricing errors, and will be able to pursue the matter further.
As part of the undertakings given to theAustralian Securities and Investments Commission(ASIC), theAustralian Prudential Regulation Authority(APRA) and the Federal Court, the National Group must distribute disclosure statements to all investors affected by unit price reductions that led to the debacle.
However, the undertakings, which relate to failings byNational Australia Financial Management(NAFM), National Australia Superannuation and MLC Nominees, will not obstruct independent legal action from investors, who will be notified of the compensation agreements by mail.
APRA general manager David Louis is confident the regulators have got “every penny back” from the financial giant, but does not rule out future investor action.
The actions are the result of NAFM’s failure to accurately measure the transaction cost component of unit pricings, and its announcement mid last year that approximately $60 million had been allocated from shareholder funds to compensate for the error.
The expected compensation was then further increased to just over $65 million earlier this year following an independent actuarial assessment by Trowbridge Deloitte.
In the undertakings, 235,000 investors in 21 superannuation and life insurance products will receive a total $67.2 million compensation by the end of this year.
As announced in August last year, $60.3 million will be paid to investors who suffered from unit price reductions following the integration of its wealth management business with MLC, while a further $6.9 million will be paid to investors after the investigations led to the discovery of historical errors in unit pricing by NAFM over the last decade.
AUTHOR
Lucie Beaman
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