NAB’s wealth management arm has reached an agreement with the regulators to pay $67.2 million compensation to customers of its managed fund business over unit price breaches during 2001.

About 235,000 investors in 21 funds will share the payout after NAB gave an enforceable undertaking to the Federal Court and the Australian Securities and Investments Commission (ASIC) last week. The group said most people will receive between $5 and $50 each, with a few receiving close to $10,000.

The decision follows an extensive investigation by ASIC and the Australian Prudential Regulation Authority (APRA) after they became concerned that investors didn’t receive timely disclosure about the integration of of NAB’s super business with MLC (which it bought in 2000) or the subsequent unit price reduction of their investments in October 2001. The breaches involved NAB subsidiaries National Australia Financial Management, National Australia Superannuation and MLC Nominees.

“(This) settlement should send a strong signal that high disclosure and governance standards are required when superannuation funds are merged,” ASIC Chairman David Knott said.

Once the merger had been completed, money was moved between funds, thereby triggering a devaluation in the unit price of the original fund. To avoid disadvantaging the remaining investors in the fund, NAB cut the unit price. Investors weren’t informed of this until more than a month later and did not receive specific details until some months after that.

National Wealth Management exectuive manager Peter Scott says the company “acknowledges that the investor communication processes around the unit price reductions and around the closure of certain products as part of superannuation integration were not satisfactory”.

“We have worked closely with ASIC and APRA for some time on this issue and have now agreed on a program of actions and review to avoid such issues in the future,” Mr Scott said.

NAB will send disclosure statements to affected investors and publish the material on its website.