NAB blasted for incorrect customer fees

Nearly 6000 National Australia Bank customers were charged incorrect fees for several years even though the bank was aware of the problem, the Federal Court has found.

The Federal Court ruled that NAB engaged in "unconscionable conduct" over the periodical payment fees, following a lawsuit brought by the Australian Securities and Investments Commission.

The bank "took advantage of the customers' continuing lack of knowledge, and acted in its own self-interest by continuing to operate a system which it knew wrongfully deducted sums from its customers' accounts", Justice Roger Derrington ruled on Monday.

The fees in question were not large, either $1.80 or $5.30, but involved more than 1.6 million transactions between July 20, 2007, and February 22, 2019.

A NAB spokesperson said it had already spent $8.3 million in refunds and interest to the affected customers.

"We acknowledge some customers were incorrectly charged for periodical payment fees several years ago," the spokesperson said.

"The issue related to the incorrect selection of a fee when setting up a payment arrangement.

"We apologise to all impacted customers for this and have now completed a remediation program to set things right."

The bank overcharged 4874 personal banking customers and 913 business customers a total of $365,454 in fees for the monthly automated payments.

The overcharging was apparently the result of human error when the automated payments were set up by NAB staff.

Some customers were entitled to an exemption but did not receive one, and others were charged a fee of $5.30 when the correct fee was $1.80.

ASIC deputy chairwoman Sarah Court blasted the bank's conduct.

"The continued charging of incorrect fees to customers when NAB knew it was occurring ... demonstrated that NAB was promoting its own interests over those of its customers," the corporate regulator said.

"Disappointingly, it took NAB over two years to switch off the periodical payment fees after becoming aware of the issue."

The bank stopped charging periodical payment fees to customers in 2019.

The matter will return to court at a later date.