National Australia Bank has been rebuked by the Federal Court for not fixing a problem that resulted in thousands of customers getting overcharged fees for over two years even though the bank knew about it.
The Australian Securities and Investments Commission alleged that between February 2015 and February 2019, NAB was charging fees for some periodic payments even though customers were entitled to an exemption and that in some cases NAB charged a higher fee than it should have. A total of $365,454 in periodic payment fees were overcharged to 4,874 personal banking and 913 business banking customers.
“The continued charging of incorrect fees to customers when NAB knew it was occurring was concerning as it demonstrated that NAB was promoting its own interests over those of its customers,” said Sarah Court, ASIC deputy chair. “Disappointingly, it took NAB over two years to switch off the periodic payment fees after becoming aware of the issue. When there are system failures that cause customers to be incorrectly charged, steps must be taken to solve the problem in a timely manner to minimise consumer harm.”
Justice Roge Derrington said NAB “took advantage” of the customers’ continuing lack of knowledge and “acted in its own self-interest” when the bank continued to operate the faulty system.
“This conduct fell so far below the standards required of a bank’s obligations to its customers that it was unconscionable,” Derrington said. “It was neither proper nor right according to ordinary commercial values in Australian society, and it was offensive to conscience. Once it [NAB] was aware that its systems were wrongly charging PP fees to some clients who had no obligation to pay them, it was neither competent nor ethical to continue to charge them and to fail to inform them or advise them to review their accounts. Neither could it be said to be fair or honest. Compliance would require suitable remedial action to be undertaken with appropriate urgency once aware of the wrong it had done.”
NAB’s conduct was also found to have violated its obligations as an Australian financial services licensee to ensure that financial services covered by its licence were provided efficiently, honestly, and fairly, and to comply with the financial services laws.
The matter will be listed for a hearing on the scope of any further relief, including penalty on a date to be fixed, ASIC said.
