The Federal Court found that National Australia Bank (NAB) overcharged thousands of customers in what was dubbed “unconscionable conduct”.
The court found NAB continued to charge customers periodic payment fees even though the bank knew the overcharging was occurring.
ASIC alleged that between February 2015 and February 2019, NAB overcharged fees for some periodic payments even though customers were entitled to an exemption. ASIC said in some cases NAB charged a higher fee than it should have.
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In total, NAB overcharged 4,874 personal banking and 913 business banking customers a total of $365,454 in periodic payment fees.
“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,” ASIC deputy chair Sarah Court said.
“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.”
In relation to the unconscionable conduct, Justice Derrington said NAB “took advantage of the customers” continued 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.
The conduct fell so far below the standards required of a bank’s obligations to its customers that it was unconscionable, ASIC said.
“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,” Justice Derrington said.
The Court also found that NAB’s unconscionable conduct breached its obligations to ensure that financial services were provided efficiently, honestly and fairly, and complied with the financial services laws.
Another court date will be set to decide what penalties NAB will face.