National Australia Bank delayed revealing the full extent of a refund to superannuation customers as it tried to avoid being labelled the "worst of a bad bunch" charging fees for no service, an inquiry has heard.
The financial services royal commission heard NAB in 2016 spent five or six months discussing ways to justify keeping fees wrongly charged to some superannuation members, although the bank denies trying to avoid having to refund all the money.
The corporate regulator now puts the refunds being paid by NAB's superannuation trustee NULIS at more than $100 million, as it predicts compensation for fees-for-no-service conduct across the financial services industry may exceed $850 million.
The bank was still dealing with its plan service fee issue affecting some MLC superannuation customers in October 2016 when ASIC was finalising an industry report on fees for no service, in which NAB faced an estimated $16.2 million compensation.
ASIC had been notified about the superannuation plan service fee in December 2015 but at the time of its report only knew the impact of one of three matters involved $100,000 compensation for about 100,000 customers.
The royal commission heard NAB, including its CEO Andrew Thorburn, knew in October 2016 it faced paying about $34 million to compensate 220,000 super customers, with the issue set to go before trustee boards.
A bank document noted that if the ASIC report was changed to include the expanded numbers, NAB would go from being "just part of the pack" among banks tied up in the fees-for-no-service issue to being the worst.
"We risk being labelled as the worst of a bad bunch amongst the ongoing advice service fees report," a communications strategy said, while recommending disclosing the total remediation amount.
The bank otherwise risked being labelled "sneaky" if it did not announce the other plan service fee issues when it had the chance, it said.
NAB executive Paul Carter said the trustee boards still had to decide the remediation approach at the time ASIC was seeking feedback on its draft fees report.
He said the bank wanted to be transparent even though it may miss the report deadline, and NAB executive Andrew Hagger contacted an ASIC commissioner.
Senior counsel assisting the commission Michael Hodge QC suggested being fully transparent with ASIC might mean saying the bank expected within two days to fully approve an additional $30 million in compensation, something already recommended by management.
Mr Carter said that was broadly the intent of Mr Hagger's proactive contact with ASIC.
Mr Hodge suggested NAB systematically looked for any way to avoid having to refund all of the money to customers charged the fee when they did not have a financial adviser linked to their account, including considering whether general advice services provided by MLC such as giving assistance over the phone meant it could retain the fees.
Mr Carter denied doing so or trying to reduce the amount of compensation, although he admitted the bank considered a cheaper option requiring customers to opt in to receive a refund.
After paying $34.7 million in remediation last year, NAB is now dumping the plan service fee with NULIS to pay another $87 million in refunds and compensation to 205,000 current Masterkey personal super members.