ASIC moves against NAB on fee-for-no-service

17 December 2019

The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings against National Australia Bank (NAB) citing several thousand contraventions of the ASIC Act and the Corporations Act over fee-for-no-service and fee disclosure statements.

The regulator said that it would be alleging that from December 2013 to February 2019 NAB:

  • Engaged in Fees for No Service Conduct by failing to provide ongoing financial planning services to a large number of customers while charging fees to those customers;
  • Failed to issue, or issued defective, fee disclosure statements (FDSs). ASIC alleges that the defective FDSs contained false or misleading representations in that they did not accurately describe the fees the customer paid and/or the services the customer actually received. The provision of the defective or out-of-time FDSs terminated the ongoing fee arrangements between NAB and its customers and it is ASIC’s case that consequently NAB was not lawfully entitled to continue to charge the fees;
  • Failed to establish and maintain compliance systems and processes to detect and prevent these failures; and
  • Contravened its overarching obligations as an Australian Financial Services licence holder to act efficiently, honestly and fairly.

ASIC said that it would also be alleged that NAB engaged in unconscionable conduct from at least May 2018 by continuing to charge ongoing service fees to certain customers when it new that it had not delivered the services and had issued defective Fee Disclosure Statements or at least knew that there was a real risk that it had engaged in this conduct.

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However, it said NAB did not stop charging fees to its customers until 4 February, this year.

ASIC said it was seeking declarations, pecuniary penalties and compliance orders from the Federal Court to prevent similar contraventions occurring in the future.

"Fees-for-no-service misconduct has been widespread and is subject to ongoing ASIC regulatory responses including investigations and enforcement actions. This widespread misconduct was examined in some detail by the Financial Services Royal Commission. ASIC views these instances of misconduct as systematic failures, unfair to customers including those that are more vulnerable," ASIC said.

"When the fees-for-no-service misconduct is coupled with Fees Disclosure Statements inadequacies or failings, customers are potentially placed in a more disadvantageous position. The customer may not therefore have been provided with the opportunity to know whether they have received the services for which they have paid or the amount of fees charged to them’,” ASIC deputy chair, Daniel Crennan QC said.




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Basically in a nutshell ASIC are hell-bent on ensuring no-one except their best buddies in industry union funds are ever in a position to have financial planning clients.

Seems to be the situation. Anyone else left will also be required to undertake training in ethics for not recommending Industry Super (ASIC and Treasury clearly believe the TV Ads).

Nothing will happen to the NAB employees or those in charge of the fee debacle! ASIC will just continue to go after the independent financial planners (oops not allowed to say that) who don't have the backing of the big banks or AFSL groups... the low hanging fruit are easy to shoot down. Keep up the great work ASIC while lives continue to be destroyed and 12% of the advisers are now out of the game and 16 have taken their own lives.

ASIC hasn't even started on the so called Independent financial planner. The big guys are the low hanging fruit and that is where their attention is squarely focussed. They could be kept very busing on fee for no service in the IFA space.

Just waiting on ASIC to make enquiries as to how Industry Super pay all their Advisers..... It's almost like a fee comes out of their customers accounts, which isn't disclosed, and generally no service provided. But, its not fee for no service, because..... well in not sure why.

any FDS should alert the client to follow up. Nevertheless, why wouldn't they just pay it back and risk court action? I am sure none of NAB execs who knew all about this for years are held accountable at all. How can public listed companies shareholders not stand up for heads to roll from Management each time this stuff happens?

Very true - no senior executives of these banks seem to be sackable for their misdeeds - just look at CBA and WBC. Why do they get paid so much when they are clearly incompetent or criminal? Not too many Board Directors have been forced to resign also. Between them they have destroyed quite a bit of shareholder value.

The usual bunch has responded in their usual pavlovian bleat that it is the industry funds that are responsible for the misconduct of banking directors and executives and for anything else.

Every ‘front page scandal’ by the banks is tied to financial advice I.e the financial adviser when in these sorts of cases no adviser is even allocated to the accounts or there was enough staff to service them all. A failure by senior management. Advisers who are mostly likely shareholders should protest at Banks AGMs. No a few execs who jumped from Counts sinking ship because they got caught up in it. And they teach ethics!

Richard, you're alive!! The rumours of your demise are obviously incorrect!! Resisted inserting unfortunately anywhere in the above.

Great to see you're still jumping to union super defence especially if you can also stick it to the banks at the same time, that will surely earn you a nice Chrissy bonus from your masters for your slavish devotion!!

Dover lost its licence for MUCH less. Shouldn't these banks and AMP lose or be forced to give up their licences ??/

Hmm not sure that’s true on a relative scale. You don’t pull a skase if you having nothing to hide.

Great idea, hand all super money over to the unions to squander and misuse! Betting you also support stopping accountants from doing SMSF's and even SMSF's in general?

Surprised after all these years of big 4 auditor reports, large consulting fees, significant technical and advisory fees that it comes out now. Surprised this was not part of audit programs as it was part of new legislation. It will be great to see if the big 4 audit firms now become part of actions of recovery and penalties. Professional obligations and a slight bit of negiligence and incompetence

Good points about the audit industry and its failures. Independent financial advisors need certainty in giving advice that is based on reliable and trustworthy financial reporting. If auditors fail to give proper and independent audits, then it is the standing of financial advisors is diminished in the eyes and opinion of clients who relied on their advisors to give good advice. Both clients and advisors miss out by poor and compromised auditors.

Combined audit activities and consultation activities should be banned in operating in single large auditing firms.

No chance of any recovery of fees paid. The contracts would not have left that option open and it’s all care and no responsibility for hacks at big 4. Competence can be hidden by reputation and name just like CBA execs etc.

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