NAB found to have engaged in unconscionable conduct
The Federal Court has found NAB engaged in unconscionable conduct by continuing to charge customers periodic payment fees even though it was aware of the overcharging.
The Australian Securities and Investments Commission (ASIC) alleged that between February 2015 and February 2019, NAB was charging fees for some periodic payments even though customers were entitled to an exemption and that in some cases NAB charged a higher fee than it should have.
NAB overcharged 4,874 personal banking and 913 business banking customers a total of $365,454 in periodic payment fees.
ASIC deputy chair, Sarah Court, said: “The continued charging of incorrect fees to customers when NAB knew it was occurring was concerning as it demonstrated that NAB was promoting its own interests over those of its customers. Disappointingly, it took NAB over two years to switch off the periodic payment fees after becoming aware of the issue.
“When there are system failures that cause customers to be incorrectly charged, steps must be taken to solve the problem in a timely manner to minimise consumer harm.”
Justice Derrington said NAB ‘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, a matter which classed as unconscionable conduct.
“Once it [NAB] was aware that its systems were wrongly charging PP (Periodic Payment) Fees to some clients who had no obligation to pay them, it was neither competent nor ethical to continue to charge them and to fail to inform them or advise them to review their accounts.
“Neither could it be said to be fair or honest. Compliance would require suitable remedial action to be undertaken with appropriate urgency once aware of the wrong it had done.”
The Court also found that NAB’s unconscionable conduct contravened its obligations as an Australian financial services licensee to ensure that financial services covered by its licence were provided efficiently, honestly and fairly, and to comply with the financial services laws.
NAB ceased charging all periodic payment fees to customers on 22 February, 2019 and as of 28 April, 2021, the bank had paid $8.3 million in remediation to affected customers.
The matter would be listed for a hearing on the scope of any further relief, including penalty on a date to be fixed.
AUTHOR
Laura Dew
Recommended for you
Fund managers are seeking to strengthen their distribution teams to target the wealth management channels, but recruiters say it can be difficult to find senior hires.
Having previously stated a desire for greater expertise in fixed income, Bennelong Funds Management has partnered with Allspring Global Investments on a global income strategy.
AUM in alternative ETFs have reached US$0.28 trillion, according to State Street, with three-quarters of advisers planning to increase their allocations to the vehicles.
Quinbrook Infrastructure Partners managing director, APAC, Rob Kerr, is to leave the firm at the end of July, and a successor has been found from QIC.
...and yet they still want to make it possible for these droogs to return to the Advice framework. :(
Please... If Michelle Levy's recommendations are to be adopted, just put a blanket ban on Vertical Integration, where the product "source" is involved, including Industry Super. Otherwise we will be guaranteed that there will be another Royal Commission 10 years down the track!!!