- The Australian Securities and Investments Commission has launched legal action against NAB
- The corporate watchdog claims the bank has committed thousands of violations in charging customers without providing services
- NAB says it has acknowledged the charges and will work co-operatively alongside ASIC to resolve the issue
- NAB’s share price has closed 0.2 per cent in the red, shares are now trading for $25.47 each
The Australian Securities and Investments Commission (ASIC) has launched legal action against NAB, claiming the bank has committed thousands of violations in charging customers without providing services.
The allegations propose between December 2013 and February this year NAB was in breach of failing to provide financial planning services to paying customers. Additionally, the corporate watchdog claims the banking giant reported false and misleading information in its fee disclosure statements.
Today’s statement by ASIC wrote: “ASIC alleges that the defective FDSs contained false or misleading representations in that they did not accurately describe the fees the customer paid and/or the services the customer actually received.”
On top of this, the independent government body alleges that from at least May last year, NAB knew of its misconduct, however, didn’t stop until February 4, this year.
The maximum penalty for charges regarding fees for no service is $250,000 per charge. For unconscionable conduct and false and misleading representation, the penalty ranges from $1.7 million to $2.1 million per charge.
ASIC’s interrogation into fees for no services has seen each of the Big Four impacted by customer remediation charges. In ASIC’s release today it detailed NAB has set aside $2 billion to cover these refunds.
“Fees for no service misconduct has been widespread and is subject to ongoing ASIC regulatory responses including investigations and enforcement actions,” ASIC Deputy Chair Daniel Crennan QC said.
“ASIC views these instances of misconduct as systematic failures, unfair to customers including those that are more vulnerable,” Daniel added.
NAB responded to the allegations today, issuing a statement to the Australian market.
The bank’s Chief Legal and Commercial Counsel, Sharon Cook stated NAB has previously acknowledged its breaches.
“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 FP clients,” Sharon said.
In the release, it details NAB began its remediation process in December last year and expects in to be completed by June next year. Sharon explained NAB will continue to work alongside ASIC to resolve the issue.
The bank’s financial planning system has undergone changes to its system and controls to improve its process. Changes include more training and guidance, especially targeting protocol around fee disclosure statements.
NAB’s share price has closed 0.2 per cent in the red, shares are now trading for $25.47 each.