‘Uncomfortable times’ ahead in royal commission: NAB

The third round is set to focus on loans to small and medium-sized enterprises, with responsible lending and unfair contract terms coming into focus.

The hearings will consider the conduct of several of the leading banks in respect of their dealings with small and medium enterprises, in particular in providing credit to businesses.

It has already been revealed that NAB will be called to give evidence during the hearings for a case study looking at its approach to “enforcement, management and monitoring of loans to businesses”.

Case studies from the remaining three major banks will also be heard during the third round of hearings next week, which will also explore the current legal and regulatory regimes as well as self-regulation under the Code of Banking Practice.

Speaking of the impact of the royal commission at a recent media briefing, Steve Kane, NAB’s general manager of broker distribution, said that the royal commission, the Productivity Commission’s hearings and ASIC’s remuneration review will all help NAB “design processes, products and services that suit what the customer needs and are fully transparent”.

He continued: “NAB is a customer-focused organisation. Putting the customer at the centre of everything and being able to learn and support the change that needs to be done is really what we are at the heart of.

“While the royal commission is uncovering things that have been very ordinary in terms of customer outcomes, it’s also given us a great opportunity to improve on what we do. So, we fully support what comes out of it because it will make the whole environment for customers that much better.”

Mr Kane added: “There will be, and has been, uncomfortable times in the royal commission, but at the end of the day, we are doing things to change and support what is really at the centre of all of this: making sure that the customer gets the best possible opportunity that they need.

“It is very important that, whatever comes out of the royal commission, we learn from that as a bank and as a marketplace and we learn where we can improve to make sure that the end customer result is as good as it can be.”

SME lending “a bit of a rollercoaster”

Speaking of NAB’s upcoming involvement in the royal commission hearings in regard to its approach to “enforcement, management and monitoring of loans to businesses”, the general manager of NAB commercial broker, Chris Thomas, said: “We have a really robust management process that is all about customers and one of the things that we have been really conscious to do is build a really strong three-way relationship that goes to the heart of being able to communicate with business owners. 

“This will assist in supporting that, but the processes and policies and human connection with customers, as it stands today, we see as being really robust.” 

Mr Thomas added: “SME lending is a bit of a rollercoaster at times because business conditions fluctuate and business customers go through ebbs and flows themselves, so it’s not all plain sailing.

“You have to be committed and you have to be for the long haul if you are a true business bank. That is what we’ve always espoused and been passionate about.” 

The GM of NAB commercial broker added that the third-party channel was a crucial component of good consumer outcomes for SMEs. 

Mr Thomas said: “We see the role of the broker as a partner working with us to support their customers, regardless of the circumstances that play out. It can be a situation with growth, it can equally be a situation of challenge; it’s how you work together. 

“It is a deeper relationship that brokers have with their customers that takes it beyond just simply a transaction and goes to the heart of the strategy of the business. It goes to the motivating factors behind family small business and it will get to the core of a plan that works over a number of years. So, it is not just a transactional plan, it is more than that, it’s a deeper relationship.” 

He continued: “We are certainly proud of the systems we have in place to support that. But I can’t understate the importance of people and communication and being able to sit down and talk through circumstances as they play out; that is one of the great keys to ensuring that business customers feel that support, regardless of the circumstances they find themselves in.” 

Building on this, Mr Kane said: “NAB absolutely supports the broker channel and we believe in the channel not just for the fact that it services the bank’s need for growth in mortgages and small business and commercial lending, but because of the services and the effort that goes into supplying the majority of Australians with their opportunity to live their dream around home ownership, whether it be for investment or owner-occupation.

“So, we are fully committed to channel and we’ve been very transparent through the number of inquiries that are happening at the moment, from the ASIC remuneration review through to Anthony Waldron [NAB’s executive general manager, broker partnerships] who is chair of the Combined Industry Forum. We are very focused on delivering for the mortgage broker channel, the Productivity Commission, the royal commission.

“All of these things are out there reviewing the broker channel. We have been very transparent. All of our support and our position is well known.”

[Related: Royal commission ‘not representative’ of broking: Bouris]