Improperly Witnessing Binding Nominations Was Common Practice At NAB

Improperly witnessing superannuation binding nominations was a common practice amongst NAB staff, potentially leaving the documents invalid, the banking Royal Commission has heard.

The Royal Commission heard about a husband and wife who were NAB customers and wished to nominate each other as beneficiaries using non-lapsing binding death benefit nominations, which must be signed and dated by two witnesses. One of the witnesses was the financial adviser, and the other was seemingly a customer service officer working for the adviser.

However the service office was not present when the couple signed the document. Also the clients had left the ‘total benefit’ portion of the form blank.

According to internal NAB documents the adviser realised the errors after the meeting, and asked the client service officer to sign the nomination as a witness. The adviser also filled in the total benefit percentages and wrote the clients initials on the documents – though used the wrong initials, that is the wife’s on the husband’s and vice-versa.

NAB’s representative appearing at the banking Royal Commission said that that failing to properly complete the non-lapsing binding nomination creates the potential for the nomination to be invalid.

This was far from the only time this occurred at NAB, with it seen by NAB employees as a common practice according to internal documents presented to the Royal Commission. A memo to the NAB Breach Review Committee said: “Common statements made by employees who have been interviewed about engaging in the invalid witnessing of binding nomination documents are that, first, they understood that they were not following the instructions as set out on the application form, but they believed that this was common practice and was acceptable.”

Employees also said this was a common practice when they were working for non-NAB licensees.

NAB decided that this was a ‘significant breach’, and notified ASIC. This significant breach notification said that NAB had identified 325 staff who were involved in incorrectly witnessing nomination forms, including 204 financial advisers. According to NAB this affected 2,520 customers.

The NAB representative told the Royal Commission: “They have addressed the issues in the vast majority of cases by simply resigning the forms with valid witnesses and sending them back to us. As things stand today, there are, I think, 250 customers who have not yet returned those forms. Over time, we think that will whittle down to a much smaller number again.”

By Luke Smith

Sole Purpose Test

26 April 2016

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