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NAB share price in trouble again: ASIC to sue the big 4 ASX bank

Tristan Harrison
NAB Shares

On Tuesday ASIC announced that it’s taking court action against National Australia Bank Ltd (ASX: NAB) for fees for no service and fee disclosure statement failures.

ASIC is alleging that NAB failed to provide ongoing financial planning services to a large number of customers while charging fees.

The second allegation by ASIC is that NAB failed to issue, or issued defective, fee disclosure statements.

The third allegation is that NAB failed to establish and maintain compliance systems and processes to detect and prevent these failures.

Finally, NAB is accused by ASIC of contravening its overarching obligations as an Australian Financial Services licence holder to act efficiently, honestly and fairly.

According to ASIC, the maximum civil penalty for the contraventions against NAB is $250,000 per contravention for the charging of ongoing fees after the termination of an ongoing fee arrangement and failing to provide a timely fee disclosure statement.

In addition to that, there is a $1.7 million to $2.1 million maximum penalty per contravention for unconscionable conduct and false or misleading representations.

NAB issued a response, the bank’s Chief Legal and Commercial Counsel Sharon Cook said:

“We have already acknowledged failures where customers have paid fees for services they didn’t receive and have paid $37.8 million to 27,500 NAB Financial Planning clients. Remediation began in December 2018 and is expected to be completed by June 2020.”

NAB said it began switching off fees from February 2019 and from 1 April 2019 NAB began transitioning clients to 12-month advice contracts.

It has also made changes to systems and controls including improved guidance and training for employees about requirements and centralisation of the production of fee disclosure statements to enable enhanced monitoring and supervision of compliance with requirements.

The post NAB share price in trouble again: ASIC to sue the big 4 ASX bank appeared first on Motley Fool Australia.

Foolish takeaway

This is yet another setback for NAB and is likely to result in another painful fine. More fines means less earnings to pay dividends and less capital for the balance sheet. I don’t think I would want to buy bank shares whilst all of these investigations and fines are ongoing.

For dividends I would much rather buy shares of these top ASX income stocks.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019