The National Australia Bank Ltd. (ASX: NAB) share price has drifted around 5% lower since Australia’s Royal Commission into the banking sector begun on 13 March 2018, according to data from Yahoo! Finance.

NAB is Australia’s third-largest bank, behind Commonwealth Bank Of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), with its operations extending from business lending and banking, mortgages, credit cards and wealth management.

It owns brands like online bank UBank, retirement business MLC and other financial planning businesses. A year and a half ago NAB sold 80% of its life insurance division to Nippon Life.

Over the past five years, NAB shares have fallen by nearly 5% according to Google Finance. In other words, the NAB share price hasn’t budged much for shareholders.

So, what has the Royal Commission heard?

The main aim of the Royal Commission was to look into misconduct and poor behaviour of the Big Banks, such as CBA, Westpac and Australia and New Zealand Banking Group (ASX: ANZ). All four Big Banks had issues reported about them.

Two of the main points that came out about NAB was that around 15% of NAB’s home loans don’t comply with all of the lending standards set out in its lending policy and around 1,360 customers have been identified as potentially being affected by dodgy loans, but were yet to receive remediation, according to ABC’s reporting.

Other major points included NAB employees in Greater Western Sydney apparently accepting cash bribes to make loans based on documents that the NAB employees knew were false. NAB had dismissed multiple employees due to this type of activity. But NAB was accused of failing to report the fraudulent activity in a timely manner.

The Royal Commission suggested that NAB may have been trying to dupe the Australian Securities and Investment Commission (ASIC) by not reporting these events in a timely manner.

Big Bank Financial Advice

ASIC released its report into conflicts of interest in financial advice earlier this year. In the report, it accused GWM Adviser Services and NAB Financial Planning – owned by NAB – of not acting in the best interests of their customers.

In ASIC’s report it was revealed that in 75% of the advice files from the Big Banks, the financial advisers did not demonstrate compliance with the duty to act in the best interests of their clients. In 10% of cases the advice reviewed was likely to leave the customer in a significantly worse financial position.

So far NAB doesn’t think much of the Royal Commission, it was reported as saying today: “No particular statutory provision has been identified. Moreover, the Commission did not hear evidence from any customer affected by conduct that is said to amount to misleading and deceptive conduct.”

Of course, the NAB share price isn’t the only one which appears to be taking a hit from the Royal Commission. CBA shares are down 4.7%, Westpac shares are down 3.88% and ANZ shares are down 5.64%.


The conduct, dominance and influence of Australia’s big banks are being tested by the rise of fintech (financial technology) businesses, regulation and social pressure.

However, a history of generous dividend yields and robust share market performance makes them a favourite among Australian investors and superannuation funds.

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