National Australia Bank (NAB) has announced that its second half profits will be reduced by A$314m ($223.3m) after tax due to a customer remediation programme in the wake of its involvement in the fee-for-no-advice scandal.
The additional costs include compensation to customers affected due to issues in the bank’s wealth unit, financial adviser service fees and plan service fees. The extra costs also include costs for implementing the remediation processes and other regulatory costs.
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The charge would lower the bank’s cash earnings by about A$261m and earnings from discontinued operations by $53m in the second half.
Around 69% of the remediation costs would impact revenue, while the remainder will be reported as expenses.
“These customer remediation programmes are expected to continue into FY19, with potential for further costs, which remain uncertain at this point in time,” NAB said in a statement.
The bank further noted that costs related to responding to the royal commission are excluded from the additional charges.
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By GlobalDataNAB CEO Andrew Thorburn said: “Where we have let customers down we are determined to put things right.
“We have made good progress in resolving a number of issues that impacted our customers and we want to compensate them as quickly as possible.”
