Big four bank NAB hit with massive fine over ‘false or misleading’ conduct with fees
National Australia Bank has been hit with an $18.5 million fine for breaking the law in its financial planning division.
Federal Court Justice Jennifer Davies said in her judgment on Thursday the bank had made “false or misleading representations” about what clients were getting for their fees and how much they were paying, and that it had incorrectly charged fees to clients.
She said NAB had failed to behave “efficiently, honestly and fairly” and that its conduct was “unfair”.
The big four bank admitted it told clients they were paying a certain amount in fees when they weren’t 130 times.
It told clients they were receiving particular services for their fees when they weren’t 1,485 times.
It also failed to provide disclosure statements to clients, which should have told clients what fees they were being charged.
The bank was not allowed to charge fees without providing a disclosure statement but it did so anyway to 641 retail clients.
It admitted when it did give fee disclosure statements to clients, they contained incorrect information about how much clients were paying and what services they were paying for.
The bank would take fees from its clients automatically, such as through a direct debit system, without explaining what they were paying.
It also admitted it didn’t have adequate review systems in place.
It breached the law 2285 times between December 2013 and February 2019, when charging 1382 clients more than $2 million in fees.
The bank failed “to do all things necessary to ensure that its representatives were adequately trained, and were competent, to provide financial services”, Judge Davies said.
She also ordered that NAB must have an independent expert assess any new fee it intends to bring in for the next three years, either with agreement with ASIC or appointed by the court.
NAB must pay legal costs for the Australian Securities and Investments Commission, who brought the court action.
In a statement, NAB Group Executive, Legal and Commercial Services Sharon Cook said the bank admitted to a number of the breaches.
“We sincerely apologise to those customers who were impacted by this issue,” she 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 $31m to more than 15,000 customers in order to make things right.”
ASIC had asked the court to fine the bank $40 million, telling the court the breaches were “systemic in nature” and that there was “deep knowledge” within NAB of what was occurring.
It said “the knowledge of senior management is especially significant” and argued the breaches were not the result of negligence or carelessness.
The result was closer to NAB’s submission of $15 million, after it argued ASIC’s proposed fine was “manifestly excessive” and that it didn’t break the law deliberately.
Justice Davies said the bank had shown “substantial contrition and has accepted responsibility for the contraventions both in words and by its actions”.
NAB’s financial planning division offers financial reviews, personal consultations and recaps and written reports on the status of the client’s strategies.
The bank is the fifth-largest listed company in Australia.
Source : www.flexi-news.com