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The National Australia Bank (NAB) today announced it will be refunding customers affected by an overcharging issue relating to a small number of fixed rate interest only loan types principally for business purposes.
This issue was identified as part of the NAB's review of manual processes and systems announced in May this year.
NAB's Executive Director and CEO Australia, Ahmed Fahour, apologised for the error which dates back to 1992.
Mr Fahour said the problem has been fixed and no longer impacts customers.
"We said that as part of stabilising the business we needed to look hard at our processes and systems. Where we find an issue, we need to be transparent, apologise and ensure customers are fully compensated.
"This is about rebuilding trust with our customers.
"As a result of this work, we have recently identified an error on some fixed rate interest only business and investment loans where a manual intervention by the banker was required when their fixed rate period expired, to ensure the loan reverted to the correct rate.
"In some instances the manual process failed and customers were incorrectly switched to default interest.
"We estimate the overcharge amounts to around $21.6 million. We have provisioned $18m post tax for this in our full year accounts to refund customers with interest," Mr Fahour said.
The customer data is currently being compiled and refunding is due to commence in early 2006.
Customers with any further enquires are being asked to contact a dedicated help line on 1800 724 638.
FOR FURTHER INFORMATION
John Fergusson
0407 826 952
Tim O'Leary
0414 446 826
Notes:
Loan types affected: Estimate of affected accounts - 50,000
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Business Fixed Rate Short Term Interest Only
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Business Fixed Rate Interest Only
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Business Combination Loan
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Business Instalment Loan
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Personal Residential Fixed Rate Interest Only Loan
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