A fee is a fee of course, of course, unless it is a commission and then ripped off customers can't get a refund.

This distinction between a fee and a commission was at the heart of a grilling for National Australia Bank as the banking royal commission began two weeks of hearings into the superannuation sector.

NAB was accused of labelling some fees as commissions to avoid refunding customers for services they have not received.

Former NAB wealth executive general manager Paul Carter.

Former NAB wealth executive general manager Paul Carter.

Photo: AAP

NAB is in the process of completing refunds totalling more than $120 million to hundreds of thousands of customers for incorrectly applied fees and fees for no service.

"There's an important difference… between a commission and a fee for service, which is if it's a commission and you don't provide services, then MLC can say and does say, "We don't have to refund the money if we don't provide the service"?" Counsel assisting the royal commission Michael Hodge, QC, asked NAB executive Paul Carter.

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Mr Carter eventually agreed that it was correct that NAB would not have to refund commission payments that were paid by customers who received no service but denied NAB was avoiding refunds.

Mr Carter told the royal commission that some MLC customers charged "adviser contribution fees"and "employer service fees" may have not received any service, but he said these were not fees but in fact commissions.

When pressed on why NAB called some commissions fees, Mr Carter said: “The wording could have been enhanced."

Mr Carter also told the royal commission it was in members interest to be charged a commission because it meant that planners would stay with NAB and thus not lead to a leaking of funds from NAB. Mr Hodge asked Mr Carter more than once how that was to the benefit of members.

Earlier in the day the royal commission heard, NAB super customers are charged multiple fees for simple accounts only holding cash.

The royal commission heard that NAB was charging some of its most conservative customers, who had 100 per of their nest egg invested in direct cash, fees totalling 1.85 per cent of their savings for managing their superannuation.

National Australia Bank's superannuation trustee Nulis was hammered at the royal commission over its practice of calling some commissions fees.

National Australia Bank’s superannuation trustee Nulis was hammered at the royal commission over its practice of calling some commissions fees.

Photo: Fairfax Media

At the same time, NAB’s cash fund was returning 1.2 per cent to members, leading to an erosion in some customer’s super savings as the return was less than the fees.

The royal commission heard that NAB charges its MLC Super customers an administration fees of 1.5 per cent for the first $44,999, a type of commission called an adviser contribution fee and often times a plan service fee for linking the customer to a dedicated financial planner, whether they sought advice or not.

NAB’s slew of fees was the focus of the first day of hearings into misconduct in the superannuation sector.

Between 2012 and 2017, NAB charged its super customers more than $120 million in fees they didn’t need to pay, the royal commission has heard.

NAB has already promised to refund $87 million in fees unnessarily paid by its MLC super customers to have a financial adviser on hand.

That $87m is on top of the $35 million the bank previously announced would be refunded to customers for incorrect fee charging. Mr Carter told the royal commission that NAB had refunded all of the money it owed to customers for incorrect fee charging.

“This fee was subsequently subject of a review by NAB and as you pointed out before these fees have been refunded to members,” Mr Carter said.

Mr Hodge seized on Mr Carter’s description of events, saying: “I think you have to be clear here. That’s not true,” Mr Hodge said to Mr Carter.

Mr Hodge explained that NAB will continue to charge the fee until September 30 this year rather than shutting it off immediately.

“Why you can’t stop charging those fees until September this year?” Mr Hodge asked Mr Carter.

Mr Carter said that he was no longer head of superannuation platforms at NAB having left the role in 2017. Mr Carter is currently a senior executive within NAB’s Bank of New Zealand subsidiary.

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