ASIC has taken action against the superannuation trustee of NAB – NULIS Nominees – after it made changes to death and TPD insurances which resulted in 220,000 customers being charged advice fees without receiving advice.
The regulator has imposed additional licence conditions on the Australian financial services licence of NULIS after it was also found to have incorrectly assessed 10 insurance claims resulting in $1.6 million of claims being underpaid or denied.
Under the conditions NULIS has been be required to engage an independent expert, and has chosen KPMG, to assess and report on the adequacy of its compliance and risk management practices for its retail and wrap superannuation funds.
The action follows the transfer, during 2012 and 2013, of all members in a number of products to MLC MasterKey Business Super (MKBS) and MLC MasterKey Personal Super (MKPS) which included changes to the death and TPD insurance of MKBS and MKPS members impacting 400,000 fund members.
On 1 July 2016, NAB restructured its superannuation business and transferred a number of superannuation funds, including the MKBS and MKPS products, into the MLC Super Fund, at which time NULIS became the trustee of the transferred funds.
“…we didn’t execute the change well and we’re sorry to those customers affected…”
ASIC stated that during the transfers of 2012 and 2013 there was a breakdown in risk management and communication procedures which included inadequate disclosure of insurance changes to members and insurance policies not being updated.
As a result of these breakdowns, incorrect death and TPD insurance tests were applied to MKBS and MKPS members between May 2013 and July 2015.
This resulted in 220,000 member accounts being incorrectly charged planned service fees of $34.7 million for the provision of general advice, between September 2012 and October 2016, however, no advisers had been appointed to provide such advice.
NAB has stated it will compensate fund members, at an average amount of $150 per customer account, for the incorrect charges and has already compensated the 10 members with incorrectly assessed claims with a total of $1.8 million, including interest.
In a separate statement NULIS said it had commissioned an independent Assurance Review into its superannuation business with the first report from KPMG to be provided to ASIC and NULIS by July 2017.
NAB Acting Executive General Manager, Wealth Products, Garry Mulcahy said the bank supported the review “…as it will give our customers further confidence in the systems and processes supporting our superannuation business, following a period of significant transformation.”
“Our intention with the proactive restructuring of our corporate super products and the upgrade of insurance products was to do the right thing by our customers, and we did provide equivalent or better outcomes for customers. However, we didn’t execute the change well and we’re sorry to those customers affected,” Mulcahy said.
