NAB fined $2.1m over wrongful payment fees
National Australia Bank (NAB) has been ordered to pay $2.1 million by the Federal Court for unconscionable conduct by continuing to charge periodic payment fees even though NAB knew it was wrongfully overcharging customers.
The Court found that between January 2017 and July 2018, NAB engaged in unconscionable conduct by continuing to charge periodic payment fees when it knew it had no contractual entitlement to do so. NAB wrongfully charged periodic payment fees on 74,593 occasions totalling $139,845 to 2,888 personal banking customers and 513 business banking customers.
ASIC deputy chair, Sarah Court, said: “NAB continued to charge fees when it knew it lacked any entitlement to do so and omitted to tell its customers of that wrongful charging. It took NAB over two years to stop charging these incorrect fees, which was clearly unacceptable.
“The Court concluded that the central cause of NAB’s wrongful charging was the bank’s inability to manage its own computer systems and its unwillingness to apply sufficient resources to remedy the problem in a timely manner.
“An unconscionable conduct ruling, penalty and resulting remediation program demonstrates the consequences that come from not resolving an issue in a timely way. If systems have let customers down, we expect all financial institutions, especially our banks, to act quickly to reduce consumer harm."
Justice Derrington said the penalty is the maximum penalty for the single contravention. However, she said it is "woefully insufficient in the circumstances".
"However, some solace can be taken in the fact that, in the time that has passed since the contravening conduct in this case occurred, the relevant provisions of the ASIC Act have been updated to permit the imposition of a substantially higher penalty."
In addition to the $2.1 million penalty, NAB has paid approximately $9 million in remediation to affected customers who incurred incorrect periodic payment fees from 1 August 2001.
Justice Derrington also ordered NAB to publish an adverse publicity notice on its website and pay ASIC’s costs.
A statement from NAB said: "We acknowledge some customers were incorrectly charged for periodical payment fees several years ago. This issue related to the incorrect selection of a fee by NAB when setting up a payment arrangement within personal and business banking accounts.
“We apologise to all impacted customers. We have completed a remediation program to set things right and repaid more than $8.3 million of fees plus interest to affected customers.”
Recommended for you
Platinum Asset Management has put its two closed-end funds under strategic review in a bid to reduce the share price discount to pre-tax NTA and maximise shareholder value.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
So a fine 15 times the amount of fees charged. So for the Australia Super case where $69 million in fees was incorrectly charged do we expect a fine of $1,035,000,000? If not why not?
Add new comment