NAB slugged with $2.1m penalty over ASIC legal action
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The news: NAB has been slapped with a $2.1 million penalty by the Federal Court for unconscionable conduct for continuing to charge periodic payment fees despite knowing it was wrongfully overcharging customers.
The numbers: The court found that between January 2017 and July 2018, NAB engaged in unconscionable conduct by continuing to charge periodic payment fees when it knew it had no contractual entitlement to do so. NAB wrongfully charged periodic payment fees on 74,593 occasions totalling $139,845 to 2,888 personal banking customers and 513 business banking customers. In addition to the $2.1 million penalty, NAB has paid approximately $9 million in remediation to affected customers who incurred incorrect periodic payment fees from 1 August 2001.
The context: Justice Roger Derrington found NAB unjustifiably advanced its self interest whilst knowing that its customers were oblivious to the wrongful charging that was taking place. In imposing the penalty, Justice Derrington noted that the maximum penalty for the single contravention was applied, noting ‘the only penalty that can appropriately be imposed is $2.1 million, which he said was without question, woefully insufficient in the circumstances.
What they said: "NAB continued to charge fees when it knew it lacked any entitlement to do so and omitted to tell its customers of that wrongful charging. It took NAB over two years to stop charging these incorrect fees, which was clearly unacceptable," ASIC Deputy Chair Sarah Court said.
"The Court concluded that the central cause of NAB’s wrongful charging was the bank’s inability to manage its own computer systems and its unwillingness to apply sufficient resources to remedy the problem in a timely manner. If systems have let customers down, we expect all financial institutions, especially our banks, to act quickly to reduce consumer harm."
"It deliberately and cynically took advantage of its customers’ unawareness, and was prepared to allow the overcharging to continue whilst it searched, admittedly in good faith, but without any great diligence, for a solution. Such moral dereliction would seem to reflect an inherent sense of entitlement, possibly precipitated by a view that no real harm would come to the bank even if its conduct was detected. It is, perhaps, also a product of a corporate culture that places a low priority on the observance of the law and on respect for its customers’ legal rights," Justic Derrington said.
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The source: ASIC
