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NAB's apathy in knowingly overcharging customers held to be unconscionable.

On 7 November 2022, the Federal Court of Australia found the National Australia Bank (NAB) had engaged in unconscionable conduct under section 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by overcharging its customers more than $360,000 in periodic payment fees between February 2015 and February 2019.


In the period between 20 July 2007 and 22 February 2019, NAB wrongly overcharged some of its customers fees for periodic payments, even though customers were entitled to an exemption. This overcharging occurred on at least 1,608,575 transactions.

Around October 2016, NAB had become aware of the possibility that customers’ accounts had been overcharged and in around December 2016, it commenced an investigation into which accounts had been overcharged.

However, the overcharging of customers continued for more than 2 years until 22 February 2019, when NAB removed fees for all periodical payments.


ASIC alleged that from January 2017, NAB had sufficient knowledge of the nature and the extent to which its customers were being wrongfully overcharge, and that this conduct amounted to misleading or deceptive conduct (section 12DA of the ASIC Act), the making of false or misleading representations (section 12DB of the ASIC Act), and to unconscionable conduct (section 12CB of the ASIC Act).

In response, while accepting that the overcharging had occurred, NAB claimed that it had limited knowledge of the circumstances of the overcharging, including details such as the number of persons who were being overcharged and the occasions on which it was occurring, and that this meant its conduct in continuing to overcharge some of its customers could not be characterised as unconscionable.


The Court found that NAB had engaged in unconscionable conduct by continuing to overcharge the periodic payment fees beyond January 2017 when it knew it had no contractual right to do so, and where it failed to inform its customers that the overcharging was occurring: at [322]. The Court said that by January 2017, once the matter had been brought to NAB’s attention and it had had the opportunity to understand what was occurring, it generally knew that its systems were overcharging some of its customers. It said that while NAB may not have been fully aware of some features of the overcharging, its then actual knowledge of general overcharging was relevant to unconscionability: at [322].

In finding that NAB’s conduct was unconscionable, the Court said that NAB’s continuing to overcharge its customers beyond January 2017 was ‘not merely unjust or unreasonable [but approached] serious apathy [towards its customers]’: at [341].

The Court said (at [341]) that NAB was knew that its customers were generally unaware of the overcharging, but in failing to inform them:

it took advantage of the customers’ continuing 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 Court went on to say (at [342]) that NAB’s conduct:

fell so far below the standards required of a bank’s obligations to its customers that it was unconscionable. It was neither proper nor right according to ordinary commercial values in Australian society, and it was offensive to conscience.”

It is also noteworthy that the Court said that (at [347]), while it was not strictly necessary for it to decide in this case:

in the context of [unconscionable conduct] it may be that businesses who even unintentionally wrongly cause harm to their customers, have a serious obligation to take all reasonable steps to avoid its continuance, even if some of the steps might cause some disadvantage to themselves.”

The Court dismissed ASIC’s other claims, including those in relation to misleading and deceptive conduct and false and misleading misrepresentations.

The Court did not make orders as to other relief, with the parties to be heard at a later stage.

By Sam Williams and Rob Norton

Unconscionable conduct is behaviour so harsh and unjust that it is deemed to fall so far outside the norms of society that it is offensive to good conscience. In the face of such conduct, courts have both an equitable and statutory jurisdiction to sanction that unconscionable behaviour.


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