NAB reveals mass code breaches

Facing parliamentary scrutiny around his bank’s executive accountability, National Australia Bank chief executive, Andrew Thorburn attempted on Friday morning to head the standing committee off at the pass, revealing that more than one thousand NAB employees had faced disciplinary action for breaching the bank’s code of conduct.

NAB’s executive accountability processes, particularly within its troubled wealth division came under early fire at the second round of public hearings into Australia’s four major banks in Canberra.

However, in his opening statements, NAB's Thorburn declared accountability as “a fundamental principle of our bank.”

“It’s my role to make sure that executives know what they’re accountable for and what behaviour is expected of them. This is then cascaded all the way down through the bank.

“The message here to all our people is that we are in a position of trust. We have high standards, they are expected to be met and if they are not there are consequences.”

Thorburn told the House of Representatives Standing Committee that for financial year 2016, NAB had proactively identified 1,138 “people in our bank who were deemed to have not met our code of conduct.”

“The consequences for those people ranged from a formal warning, through to dismissal. It also involves a reduction or elimination of any bonus.”

According to the chief executive, of the 1,138 in breach of conduct, there were five senior managers – two were subsequently dismissed, and three faced “other disciplinary” action.

Key accountability areas 

Thorburn added the bank, as a consequence of the parliamentary committee’s recommendations, then reviewed similar “issues” over the past two years, applied the renewed standard and taken similar action against 48 additional people.

“Accountability; accountability is a fundamental principle in our bank,” he said.

Thorburn said there were four key accountability areas for NAB executives across customers, risk management, financial performance and team.

“In addition to that, wrapping around it is our company values and our code of conduct,” he added. “There are consequences for people if our behavioural standards are not met.”

Foreshadowing a line of questioning from the committee, Thorburn outlined customer focused outcomes and protections implemented by NAB over the last financial year, including the strengthening of the bank’s whistleblower program which involves having it managed independently of the bank; enabling of customers to be able to close credit cards online; reporting planners who breach the code of conduct to ASIC; resolving customer complaints “within 45 days”; and “increasing significantly" its compliance monitoring.

“Also, since we were here last we’ve made it a formal policy in the bank, that any prudential breach must be investigated by a dedicated and specialist team.”

The Australian Bankers' Association (of which Thorburn is the chair) CEO Steven Munchenberg will front the hearings next week joining the other three chief executives – CBA’s Ian Narev, ANZ’s Shayne Elliott and Westpac’s Brian Hartzer.

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