In this new age of a proactive ASIC, NAB is the latest of the big 4 banks to feel its wrath with the regulator commencing proceedings in the Federal Court for it charging fees on customer and business accounts that it knew it was not entitled to impose.
In the newly commenced proceeding, ASIC has alleged NAB charged customers almost 200,000 individual fees for periodic payments between February 2015 when it knew it was not contractually entitled to do so.
In a black eye for the bank, the proceeding also includes a claim of unconscionable conduct because NAB had been aware since October 2016 that it was not entitled to charge the fees, however took another 2 years to lodge a breach report to ASIC (in July 2018) and notify the customers about the overcharging – neatly avoiding the Banking Royal Commission's public hearings and any chance the conduct would become subject to close scrutiny by Commissioner Hayne as a representative case study.
Specifically, ASIC has alleged that between at least January 2017 and July 2018, NAB continued to charge customers periodic payment fees even though it knew overcharging was occurring and did not put systems to prevent those fees from being charged incorrectly.
Indeed, NAB did not actually change its systems and prevent the incidences of overcharging until 22 February 2019.
ASIC has further alleged that between January 2017 and July 2018, NAB engaged in unconscionable conduct and contravened its obligations as an Australian financial services license holder by not acting to ensure financial services it provided were done so efficiently, honestly and fairly and by:
continuing to charge periodic payment fees to customers in circumstances where it knew that it had no contractual entitlement to do so; and
failing to inform customers about the wrongful charging of fees, or suggest that customers review the periodic payment fees charged to their accounts.
A case management hearing in this matter is currently listed for 24 March 2021.
By Rob Norton and Louise Gehrig