Misleading bills gets NAB a $18.5m fine

·2-min read

Thousands of misleading statements on fees have led a judge to fine National Australia Bank $18.5 million.

The Big Four bank admitted it systemically collected $3.6m in fees from 1382 financial planning clients between 2013 and 2018 while giving inaccurate fee disclosure statements.

"This caused harm to customers as the inaccurate information meant they couldn't make informed decisions about the financial services they were paying for," Australian Securities and Investments Commission deputy chair Sarah Court said in a statement.

"Customers need to have confidence in their financial services providers that they will be charged correctly for the services they receive and given accurate and timely information."

NAB disclosed its offending conduct to ASIC in 2018 and admitted various corporate law breaches in the Federal Court.

But it denied the contraventions were deliberate.

It has since paid affected clients almost $5 million in refunds or remediation and said the evidence before the court didn't establish the breaches "materially impacted" clients.

Half of clients were charged fees that were within 10 per cent of what should have been charged. Overall, $1.3m of fees were collected without authority.

The bank posted profits totalling $45 billion during the five years of offending. Its current market value is $90b.

NAB had asked for a fine of $15m and a finding that its offending were at the lower end of seriousness.

But Justice Sarah Davies rebuffed claims the breaches were technical, saying clients were entitled to expect NAB wouldn't deduct fees they were not entitled to charge.

"NAB cavilled with ASIC's submission that the deficiencies in its systems and compliances processes were 'gross' and systemic," Justice Jennifer Davies said.

"But that submission misses the point that these contraventions were the product of the failure to implement robust and effective compliance measures."

ASIC had asked for a $40 million fine and asserted NAB had an "inadequate culture of compliance".

But Justice Davies said, significantly, the bank had investigated and implemented changes as system deficiencies were identified.

NAB was ordered to pay the corporate regulator's costs.

"We sincerely apologise to those customers who were impacted by this issue," NAB executive Sharon Cook said in a statement.

"To address this issue, NAB stopped charging ongoing service fees to customers of its former NAB Financial Planning business in 2019.

"In 2020, we established a remediation program which has to date paid approximately $31m to more than 15,000 customers in order to make things right."

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting