The Federal Court has ordered National Australia Bank (NAB.AX) to pay a $18.5 million penalty for failures relating to misleading fee disclosure statements.
The court found the bank had failed to act efficiently, honestly and fairly by failing to have proper systems and procedures in place to provide customers with timely fee disclosure statements.
“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,” ASIC deputy chair Sarah Court said.
“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.”
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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 fee disclosure statements.
The court also found NAB failed to provide fee disclosure statements to clients within the time required and made false or misleading representations to clients in fee disclosure statements 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 fee disclosure statements were compliant; and
it was prohibited from charging service fees.
“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,” Court said.
NAB remediating customers
NAB acknowledged the $18.5 million penalty and said it had begun repaying affected customers in 2020.
“We sincerely apologise to those customers who were impacted by this issue,” NAB executive, legal and commercial services, Sharon Cook said.
“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 launched the proceedings against NAB in December 2019, and in resolving the hearing today NAB admitted to a number of the alleged breaches.