SYDNEY • The chief executive and chairman of Australia’s fourth-largest bank NAB are quitting, the biggest scalps following a major inquiry that levelled blistering criticism at the country’s financial sector for widespread misconduct.
After a year-long inquiry that exposed a culture of greed in the financial sector, the Royal Commission this week issued a final report that singled out the National Australia Bank (NAB) chiefs for their apparent unwillingness to accept responsibility for past wrongs at the lender.
The departures of NAB chief executive Andrew Thorburn and chairman Ken Henry show the slow-burn pressure the inquiry has had on the country’s biggest firms.
Mr Thorburn had ruffled shareholders by planning two months of leave on either side of the Royal Commission’s delivery of its final report, which was hotly anticipated as a watershed moment for the country’s banking industry.
The year-long inquiry uncovered a litany of wrongdoing across the industry – from charging dead people fees to advisers pushing customers into bad investments to meet bonus targets.
NAB staff accepted cash bribes to approve fraudulent mortgages and misled the regulator over a fees-for-no-service scandal.
After the report went public on Monday, Mr Thorburn cancelled the rest of his leave. While he released a statement disagreeing with the report’s criticism of his attitude, he told local media on Tuesday that he was not sure he would last the week.
“I acknowledge that the bank has sustained damage as a result of its past practices and comments in the Royal Commission’s final report about them,” Mr Thorburn said in a statement yesterday.
“I have always sought to act in the best interests of the bank and customers and I know that I have always acted with integrity. However, I recognise there is a desire for change.”
Mr Thorburn, who joined NAB as its head of retail banking in 2005, became CEO in August 2014. He will leave on Feb 28.
Mr Henry, a former central banker and adviser to the prime minister, will stay on as chairman until the lender hires a new CEO. NAB said board member Phil Chronican, a former executive at larger rival Westpac Banking Corp, will be interim CEO.
Analysts see NAB’s chief customer officer Mike Baird, a former premier of New South Wales state, as a likely successor.
The NAB bosses were questioned about “fees for no service” during the Royal Commission. Mr Thorburn and Mr Henry have been specifically called out for their intransigence in the final report issued by the retired judge who ran the inquiry, Mr Kenneth Hayne.
Heads that have rolled
Mr Andrew Thorburn, who resigned yesterday as the chief executive of National Australia Bank, is the latest head to roll amid scandals unearthed by the year-long inquiry into misconduct in Australia’s financial industry. The other casualties are:
AMP CEO CRAIG MELLER, CHAIRMAN CATHERINE BRENNER
Mr Craig Meller resigned in April after the wealth management firm admitted to misleading the regulator over charging customers for services they didn’t receive. Ms Catherine Brenner followed 10 days later, along with general counsel Brian Salter. Three directors quit the following month.
NAB HEAD OF CONSUMER BANKING ANDREW HAGGER
Mr Andrew Hagger was ousted in an executive reshuffle in September following a gruelling appearance at the Royal Commission, where he was grilled over his communications with the regulator on the bank’s fees-for-no-service scandal. He was once considered a candidate to be the bank’s next CEO.
IOOF CEO CHRIS KELAHER, CHAIRMAN GEORGE VENARDOS
Mr Chris Kelaher and Mr George Venardos stepped aside from the wealth manager in December after the prudential regulator took court action to disqualify them and three other executives for allegedly failing to act in the best interests of superannuation members. The inquiry heard pension fund members had been treated poorly, fiduciary duties breached and board minutes handwritten on scraps of paper.
FREEDOM INSURANCE CEO CRAIG ORTON
Mr Craig Orton quit the insurance minnow in November, having earlier told the commission about the firm’s tactics of cold-calling people to sell life insurance, including to a 26-year-old man with Down syndrome, and using aggressive tactics to persuade customers not to cancel policies. Commissioner Kenneth Hayne said such behaviour was “unconscionable conduct”.
The inquiry singled out the pair for unusually stinging criticism. After hearing their testimony last November, Mr Hayne wrote: “I am not as confident as I would wish to be that the lessons of the past have been learnt.
“My fear – that there may be a wide gap between the public face NAB seeks to show and what it does in practice – remains.”