NAB to pay $18.5m penalty for fee-for-no-service FDS

The Federal Court has imposed an $18.5 million penalty on National Australia Bank (NAB) relating to fee disclosure statements (FDS) and fees for no service – the first of its kind.

The Federal Court proceedings commenced in December 2019 after the Australian Securities and Investments Commission (ASIC) alleged that NAB issued defective FDS.

ASIC said this was the first penalty imposed by the court for fee disclosure statements failures under the Corporations Act.

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The court found NAB breached the law on numerous occasions when it:

  • Charged fees for personal advice without giving customers compliant FDS;
  • Failed to provide FDS to clients within the time required;
  • Made false or misleading representations to clients in FDS about the amount clients had paid for services and the services which clients had received.

The court also found NAB had not established or maintained systems and procedures to identify whether:

  • Services were provided in accordance with client service agreements;
  • Its FDS were compliant; and
  • It was prohibited from charging service fees.

The court acknowledged NAB’s efforts to make early admissions of liability and took this into account in determining penalty.

In resolving the proceeding, NAB admitted to a number of the alleged breaches and NAB had been ordered to pay ASIC’s costs.

Sharon Cook, NAB group executive, legal and commercial services, said: “We sincerely apologise to those customers who were impacted by this issue.

“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 $31 million to more than 15,000 customers in order to make things right.”

ASIC deputy chair, Sarah Court, said: “NAB’s system failures resulted in significant fee disclosure failures over an extended period. This caused harm to customers as the inaccurate information meant they couldn’t make informed decisions about the financial services they were paying for.

“The penalty of $18.5 million handed down to NAB is a timely reminder to financial services licensees to ensure they meet their obligations to their clients.

“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.”




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So this will cover ASIC's need for levies for the next year?

NO, is the answer to the question "will this go to the ASIC adviser levy". Those costs go to consolidated revenues and we foot the bill for the legal costs. Its fair because it ensures the integrity of the industry in which we work apparently. Its a complete and utter farce if you ask me.

YIes, think that was the point Michael was making. :P

as AFA reported, the $18.5 million from NAB and $10.5 million from Westpac is paid into general government revenue and is not applied to offset small adviser practices' INDUSTRY LEVY, which are levied for ASIC litigation costs against the big institutionS - rorting - rorting - rorting

Nice one ASIC. Bet I get to see any of this.

There was a comment on here earlier this afternoon that CommPay is inaccurate tool to use in FDS / Revenue management. Where has the comment gone?

Yes, I noticed that as well. Someone is very touchy at CommPay? Care to comment CommPay?

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