In late December ASIC announced it had begun civil penalty proceedings in the Federal Court against National Australia Bank Limited (NAB) and was seeking findings of several thousand contraventions of the ASIC Act and the Corporations Act.
In its statement ASIC alleges that from December 2013 to February 2019, NAB:
- Engaged in Fees for No Service Conduct by failing to provide ongoing financial planning services to a large number of customers while charging fees to those customers
- Failed to issue, or issued defective, fee disclosure statements (FDSs). 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. The provision of the defective or out-of-time FDSs terminated the ongoing fee arrangements between NAB and its customers and it is ASIC’s case that consequently NAB was not lawfully entitled to continue to charge the fees.
- Failed to establish and maintain compliance systems and processes to detect and prevent these failures
- Contravened its overarching obligations as an Australian Financial Services licence holder to act efficiently, honestly and fairly.
ASIC alleges that NAB engaged in unconscionable conduct from at least May 2018 by continuing to charge ongoing service fees to certain customers when it knew that it had not delivered the services and had issued defective FDSs or at least knew that there was a real risk that it had engaged in this conduct. However, it alleges, NAB did not stop charging fees to its customers until 4 February 2019.
ASIC is seeking declarations, pecuniary penalties and compliance orders from the Federal Court to prevent similar contraventions occurring in the future.
Its statement says that NAB received more than $650 million in ongoing service fees from 2009 to 2018. NAB has stated that it has provisioned more than $2 billion for customer-related remediation including Fee for No Service remediation across all of its advice licensees.